Lam (t/a Sunlight Takeaway Meals) v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2016] UKFTT 659 (TC) (23 September 2016)

Lam (t/a Sunlight Takeaway Meals) v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2016] UKFTT 659 (TC) (23 September 2016)

A closure notice that satisfies s 28B(1)-(3) TMA is valid and effective when issued, regardless of whether amendments to individual partners’ returns under s 28B(4) have been made; the Tribunal has jurisdiction to hear the appeal. The amendment to the partnership return was excessive because HMRC’s approach was flawed, relying on assumptions about undisclosed accounts and unsubstantiated cash drawings without sufficient evidence. The Tribunal reduced the additional profits assessed by HMRC to reflect only the unexplained cash deposits into the London branch account, rejecting the further additions for the Hong Kong account and assumed cash.

Citation
[2016] UKFTT 659
Parties
Appellants: Wong Yau Lam and Sau Yau Lam t/a Sunlight Takeaway Meals; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
23 September 2016
Procedural Posture
Income Tax/corporation Tax Appeal / First Tier Tribunal (tax) Substantive Judgment
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Partnership Taxation, Closure Notice, Tax Return Amendment, Jurisdiction of Tribunal
Tax Law Income Tax Partnership Taxation Closure Notice Tax Return Amendment Jurisdiction of Tribunal

Case Brief

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Parties

Wong Yau Lam and Sau Yau Lam t/a Sunlight Takeaway Meals

Appellants

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Appeal / First Tier Tribunal (tax) Substantive Judgment

Legal Issues

  1. 1 Whether the closure notice under s 28B TMA was effective in the absence of amendment to partners’ individual returns under s 28B(4)
  2. 2 Whether the amendment to the partnership return to reflect alleged unrecorded sales should stand good

Ratio Decidendi

A closure notice that satisfies s 28B(1)-(3) TMA is valid and effective when issued, regardless of whether amendments to individual partners’ returns under s 28B(4) have been made; the Tribunal has jurisdiction to hear the appeal. The amendment to the partnership return was excessive because HMRC’s approach was flawed, relying on assumptions about undisclosed accounts and unsubstantiated cash drawings without sufficient evidence. The Tribunal reduced the additional profits assessed by HMRC to reflect only the unexplained cash deposits into the London branch account, rejecting the further additions for the Hong Kong account and assumed cash.

Court Disposition

Appeal allowed in part

Orders

  • The closure notice is valid and effective.
  • The amendment to the partnership return is reduced to reflect only the unexplained cash deposits into the Bank of East Asia London branch account for the year in question.