Risky Business Ltd v Revenue & Customs [2012] UKFTT 751 (TC) (07 December 2012)

Risky Business Ltd v Revenue & Customs [2012] UKFTT 751 (TC) (07 December 2012)

The Tribunal found that the Appellant's business records were inadequate, with frequent negative cash balances and unexplained adjustments. The evidence supported HMRC's contention that the commission paid by dancers was under-declared, and the directors' explanations for cash flows and personal expenditures were...

Source-derived case information.

Citation
[2012] UKFTT 751 (TC)
Parties
Appellant: Risky Business Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
07 December 2012
Procedural Posture
Corporation Tax Appeal / First Tier Tribunal (tax) Final Decision
Outcome
Appeal disallowed
Legal Topics
Discovery Assessments, Best Judgement Assessments, Negligence in Record Keeping, Under Declaration of Profits, Directors' Loan Accounts
Tax Law Corporation Tax Discovery Assessments Best Judgement Assessments Negligence in Record Keeping Under Declaration of Profits Directors' Loan Accounts

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Parties

Risky Business Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Corporation Tax Appeal / First Tier Tribunal (tax) Final Decision

Legal Issues

  1. 1 Whether HMRC's discovery assessments for corporation tax were made to best judgement
  2. 2 Whether there was negligent conduct by the taxpayer's directors in record-keeping and reporting
  3. 3 Whether the commission/fees paid by dancers were under-declared

Ratio Decidendi

The Tribunal found that the Appellant's business records were inadequate, with frequent negative cash balances and unexplained adjustments. The evidence supported HMRC's contention that the commission paid by dancers was under-declared, and the directors' explanations for cash flows and personal expenditures were implausible. The assessments were made to best judgement, and there was negligent conduct by the directors in maintaining proper records. The appeal was disallowed.

Court Disposition

Appeal disallowed

Orders

  • The discovery assessments to corporation tax for the years ending 31 March 2002, 2003, 2004, 2005, and 2006 are upheld.
  • Findings of negligent conduct by the Appellant's directors in relation to record-keeping.