Mullens v Revenue and Customs (INCOME TAX - Whether certain large payments made to the Appellant were taxable as income) [2021] UKFTT 131 (TC) (04 May 2021)

Mullens v Revenue and Customs (INCOME TAX - Whether certain large payments made to the Appellant were taxable as income) [2021] UKFTT 131 (TC) (04 May 2021)

The Tribunal found that, with the exception of the Holiday Payment, all large payments made to Mr Mullens were taxable as income because they were made as consideration for his services to the Ecclestone family interests, not as personal gifts. The Tribunal also found that HMRC's discovery assessments were valid, including under the extended time limit for fraud, and that Mr Mullens' conduct was fraudulent or deliberate except for one payment. The VAT demand on imported diamonds was issued within a reasonable time. The jewellery in question belonged to Mr Mullens for CGT purposes, and he was entitled to claim CGT losses for the theft.

Citation
[2021] UKFTT 131
Parties
Appellant: Mr Stephen J Mullens; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
04 May 2021
Procedural Posture
Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal dismissed in relation to all payments except the Holiday Payment; appeal allowed in relation to the Holiday Payment.
Legal Topics
Income Tax, Discovery Assessments, Fraudulent Conduct, Capital Gains Tax, Value Added Tax, Penalties
Tax Law Income Tax Discovery Assessments Fraudulent Conduct Capital Gains Tax Value Added Tax Penalties

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Parties

Mr Stephen J Mullens

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax Chamber) Decision

Legal Issues

  1. 1 Whether large payments made to the Appellant were taxable as income
  2. 2 Whether HMRC's discovery assessments were valid and within time limits, including for fraud
  3. 3 Whether VAT demand on imported diamonds was issued within a reasonable time

Ratio Decidendi

The Tribunal found that, with the exception of the Holiday Payment, all large payments made to Mr Mullens were taxable as income because they were made as consideration for his services to the Ecclestone family interests, not as personal gifts. The Tribunal also found that HMRC's discovery assessments were valid, including under the extended time limit for fraud, and that Mr Mullens' conduct was fraudulent or deliberate except for one payment. The VAT demand on imported diamonds was issued within a reasonable time. The jewellery in question belonged to Mr Mullens for CGT purposes, and he was entitled to claim CGT losses for the theft.

Court Disposition

Appeal dismissed in relation to all payments except the Holiday Payment; appeal allowed in relation to the Holiday Payment.

Orders

  • Payments 1, 2, 3, 4, 5, and 6 are taxable as income.
  • HMRC's discovery assessments and penalties (except as adjusted) stand.