Dangov v Revenue & Customs (INCOME TAX/CORPORATION TAX : Sub-contractors in the construction industry) [2019] UKFTT 170 (TC) (04 March 2019)

Dangov v Revenue & Customs (INCOME TAX/CORPORATION TAX : Sub-contractors in the construction industry) [2019] UKFTT 170 (TC) (04 March 2019)

The Tribunal found that HMRC was justified in disallowing expenses for materials due to lack of evidence and contractor confirmation, but allowed interest costs as business expenses. The discovery assessments were validly made, but the penalties were adjusted to reflect the partial success of the appeal. The Appellant's failure to keep adequate records and provide evidence undermined his claims, but HMRC's conduct did not warrant barring them from proceedings.

Citation
[2019] UKFTT 170
Parties
Appellant: Nikolay Dangov; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
04 March 2019
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Discovery Assessments, Business Expenses, Penalties for Careless Inaccuracies, Construction Industry Scheme, Self Assessment, Closure Notice
Tax Law Income Tax Discovery Assessments Business Expenses Penalties for Careless Inaccuracies Construction Industry Scheme Self Assessment Closure Notice

Case Brief

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Parties

Nikolay Dangov

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision

Legal Issues

  1. 1 Whether discovery assessments for tax years ending 5 April 2011, 2012, and 2013 were properly made under Section 29 TMA 1970
  2. 2 Whether the outcome of the assessments or closure notice for 2014 was excessive
  3. 3 Whether penalties under Schedule 24 Finance Act 2007 were properly imposed

Ratio Decidendi

The Tribunal found that HMRC was justified in disallowing expenses for materials due to lack of evidence and contractor confirmation, but allowed interest costs as business expenses. The discovery assessments were validly made, but the penalties were adjusted to reflect the partial success of the appeal. The Appellant's failure to keep adequate records and provide evidence undermined his claims, but HMRC's conduct did not warrant barring them from proceedings.

Court Disposition

Appeal allowed in part

Orders

  • Discovery assessments for 2011, 2012, and 2013 upheld as to principle but amounts adjusted to reflect allowed interest costs and disallowed materials expenses.
  • Closure notice for 2014 amended to reduce repayment as per findings.