Smith v Revenue & Customs (Rev 1) [2010] UKFTT 92 (TC) (24 February 2010)

Smith v Revenue & Customs (Rev 1) [2010] UKFTT 92 (TC) (24 February 2010)

The tribunal found that the appellant's accountants did not prepare accounts in accordance with generally accepted accounting practice, particularly regarding recognition of income and work in progress. The failure to comply with accounting standards constituted negligent conduct, allowing HMRC to raise discovery assessments outside statutory time limits under sections 29 and 36 TMA 1970.

Citation
[2010] UKFTT 92
Parties
Appellant: Leslie Smith; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 February 2010
Procedural Posture
Appeal / Final Judgment
Outcome
Appeal dismissed
Legal Topics
Income Tax, Corporation Tax, Computation of Profits, Generally Accepted Accounting Practice, Negligent Conduct, Discovery Assessments
Tax Law Accounting Law Income Tax Corporation Tax Computation of Profits Generally Accepted Accounting Practice Negligent Conduct Discovery Assessments

Case Brief

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Parties

Leslie Smith

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Appeal / Final Judgment

Legal Issues

  1. 1 Whether accounts were prepared in accordance with generally accepted accounting practice (GAAP) for tax purposes
  2. 2 Whether the appellant's accountants' conduct constituted negligence under section 29 and 36 TMA 1970
  3. 3 Whether HMRC could raise assessments outside statutory time limits due to alleged negligent conduct

Ratio Decidendi

The tribunal found that the appellant's accountants did not prepare accounts in accordance with generally accepted accounting practice, particularly regarding recognition of income and work in progress. The failure to comply with accounting standards constituted negligent conduct, allowing HMRC to raise discovery assessments outside statutory time limits under sections 29 and 36 TMA 1970.

Court Disposition

Appeal dismissed

Orders

  • HMRC's discovery assessments for the relevant years are upheld
  • Appellant's challenge to the assessments is rejected