LD v Revenue & Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2019] UKFTT 526 (TC) (09 August 2019)

LD v Revenue & Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2019] UKFTT 526 (TC) (09 August 2019)

The appellant failed to provide sufficient evidence that payments to SR were for deductible agent or webmaster services; the payments were more likely due to their domestic relationship. Accountancy fees were allowed only to the extent evidenced (£320). Inaccuracies in the 2013/14 and 2014/15 returns were deliberate, but not for 2015/16 where figures were expressly stated as provisional. Penalties for 2013/14 and 2014/15 upheld but with increased discounts for disclosure; penalty for 2015/16 quashed.

Citation
[2019] UKFTT 526 (TC)
Parties
Appellant: LD; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
09 August 2019
Procedural Posture
Income Tax/corporation Tax Assessment/self Assessment Appeal / First Tier Tribunal (tax Chamber) Decision on Appeal
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Self Assessment, Allowable Expenses, Discovery Assessment, Penalty Assessment, Deliberate Inaccuracy, Disclosure Discounts
Tax Law Income Tax Self Assessment Allowable Expenses Discovery Assessment Penalty Assessment Deliberate Inaccuracy Disclosure Discounts

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Parties

LD

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax/corporation Tax Assessment/self Assessment Appeal / First Tier Tribunal (tax Chamber) Decision on Appeal

Legal Issues

  1. 1 Whether alleged agent and webmaster expenses of self-employment as an adult entertainer are deductible for income tax purposes
  2. 2 Whether conduct leading to inaccuracy in tax returns was deliberate
  3. 3 Whether penalty assessments should be upheld or adjusted

Ratio Decidendi

The appellant failed to provide sufficient evidence that payments to SR were for deductible agent or webmaster services; the payments were more likely due to their domestic relationship. Accountancy fees were allowed only to the extent evidenced (£320). Inaccuracies in the 2013/14 and 2014/15 returns were deliberate, but not for 2015/16 where figures were expressly stated as provisional. Penalties for 2013/14 and 2014/15 upheld but with increased discounts for disclosure; penalty for 2015/16 quashed.

Court Disposition

Appeal allowed in part

Orders

  • Assessment for 2014/15 to be recalculated in line with agreed and determined allowable expenses
  • Assessments for 2013/14 and 2015/16 to be recalculated in light of findings for 2014/15