Scott v Revenue and Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2016] UKFTT 599 (TC) (19 August 2016)

Scott v Revenue and Customs (INCOME TAX/CORPORATION TAX : Assessment/self-assessment) [2016] UKFTT 599 (TC) (19 August 2016)

The tribunal found that Mrs Scott failed to discharge the burden of proof regarding most unidentified deposits, so the assessment largely stands, but two deposits were accepted as non-trading. HMRC failed to prove the under-declaration was deliberate, so penalties must be calculated on the basis of carelessness, not deliberate default.

Citation
[2016] UKFTT 599
Parties
Appellant: Mrs Gemma Scott; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
19 August 2016
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Decision
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Self Assessment, Tax Penalties, Burden of Proof
Tax Law Income Tax Self Assessment Tax Penalties Burden of Proof

Case Brief

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Parties

Mrs Gemma Scott

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 unidentified bank deposits represented undisclosed trading income
  2. 2 Whether the taxpayer discharged the burden of proof regarding the assessment
  3. 3 Whether HMRC discharged the burden of proof that under-declaration was deliberate

Ratio Decidendi

The tribunal found that Mrs Scott failed to discharge the burden of proof regarding most unidentified deposits, so the assessment largely stands, but two deposits were accepted as non-trading. HMRC failed to prove the under-declaration was deliberate, so penalties must be calculated on the basis of carelessness, not deliberate default.

Court Disposition

Appeal allowed in part

Orders

  • Taxable profits for 2010-11 reduced from £21,927 to £19,487
  • Penalty for incorrect Annual Investment Allowance claim confirmed at 15%