Daly v Revenue and Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2016] UKFTT 498 (TC) (13 July 2016)

Daly v Revenue and Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2016] UKFTT 498 (TC) (13 July 2016)

The Tribunal found on the balance of probabilities that the payment to Mr Daly was consideration for a service rendered (putting Mr Love in a position to profit from the land), not a gift, and was therefore taxable income. The amount received was £90,000, not £101,801. The self-assessment was inaccurate and the omission was deliberate, justifying the assessment and penalty, but both must be reduced to reflect the correct amount.

Citation
[2016] UKFTT 498
Parties
Appellant: Daniel Daly; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
13 July 2016
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal allowed in part, assessment and penalty upheld in principle but reduced in amount.
Legal Topics
Income Tax Assessment, Self Assessment, Penalty for Inaccurate Return, Characterisation of Receipt as Gift or Income
Tax Law Income Tax Assessment Self Assessment Penalty for Inaccurate Return Characterisation of Receipt as Gift or Income

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Parties

Daniel Daly

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether the sum received by Mr Daly was a gift or payment for services
  2. 2 Whether the assessment and penalty under TMA 1970 were valid and correct in amount

Ratio Decidendi

The Tribunal found on the balance of probabilities that the payment to Mr Daly was consideration for a service rendered (putting Mr Love in a position to profit from the land), not a gift, and was therefore taxable income. The amount received was £90,000, not £101,801. The self-assessment was inaccurate and the omission was deliberate, justifying the assessment and penalty, but both must be reduced to reflect the correct amount.

Court Disposition

Appeal allowed in part, assessment and penalty upheld in principle but reduced in amount.

Orders

  • Assessment under section 29 TMA 1970 upheld for £90,000 (not £101,801)
  • Penalty under section 95 TMA 1970 upheld in principle but to be recalculated based on £90,000