Smith v Revenue and Customs (INCOME TAX and VAT) [2026] UKFTT 663 (TC) (06 May 2026)

Smith v Revenue and Customs (INCOME TAX and VAT) [2026] UKFTT 663 (TC) (06 May 2026)

The Tribunal found that HMRC's discovery and best judgment assessments were valid and in time. The appellant failed to provide reliable evidence to displace the assessments or demonstrate that he ceased to be principal after March 2003. The Tribunal preferred contemporaneous documents and third-party evidence over the appellant's inconsistent oral testimony. However, the Tribunal found that some assessments overcharged the appellant and directed recalculation. Penalties for deliberate or fraudulent behaviour were upheld. HMRC's conduct did not amount to an abuse of process and the appellant received a fair trial.

Citation
[2026] UKFTT 663 (TC)
Parties
Appellant: John Smith; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
06 May 2026
Procedural Posture
Tax Appeal (income Tax and Vat) / First Tier Tribunal (tax Chamber) Final Judgment After Substantive Hearing
Outcome
Appeals largely dismissed; directions for recalculation of tax and penalties to follow.
Legal Topics
Discovery Assessments, Best Judgment Assessments, Tax Penalties, VAT Registration and Deregistration, Tax Residency, Burden of Proof, Abuse of Process
Tax Law Administrative Law Discovery Assessments Best Judgment Assessments Tax Penalties VAT Registration and Deregistration Tax Residency Burden of Proof +1 more

Case Brief

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Parties

John Smith

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Tax Appeal (income Tax and Vat) / First Tier Tribunal (tax Chamber) Final Judgment After Substantive Hearing

Legal Issues

  1. 1 Whether HMRC's discovery and best judgment assessments were valid and in time
  2. 2 Whether the appellant continued to carry on the business after the alleged sale in March 2003
  3. 3 Whether the appellant was a self-employed subcontractor or principal

Ratio Decidendi

The Tribunal found that HMRC's discovery and best judgment assessments were valid and in time. The appellant failed to provide reliable evidence to displace the assessments or demonstrate that he ceased to be principal after March 2003. The Tribunal preferred contemporaneous documents and third-party evidence over the appellant's inconsistent oral testimony. However, the Tribunal found that some assessments overcharged the appellant and directed recalculation. Penalties for deliberate or fraudulent behaviour were upheld. HMRC's conduct did not amount to an abuse of process and the appellant received a fair trial.

Court Disposition

Appeals largely dismissed; directions for recalculation of tax and penalties to follow.

Orders

  • Appeals against income tax and VAT assessments and penalties are dismissed except to the extent that recalculation is required where overcharged.
  • HMRC to recalculate tax and penalties in accordance with the Tribunal's findings.