Ahmed v Revenue & Customs (INCOME TAX/CORPORATION TAX : Profits) [2018] UKFTT 355 (TC) (27 June 2018)

Ahmed v Revenue & Customs (INCOME TAX/CORPORATION TAX : Profits) [2018] UKFTT 355 (TC) (27 June 2018)

The Tribunal held that while the appellant failed to make necessary adjustments to reflect the earnings basis for CFA income, HMRC's method of estimating adjustments was fundamentally flawed and overstated the required adjustments. The Tribunal found no evidence of carelessness to justify a discovery assessment for 2012-13. The appeal against the closure notice was allowed in principle, and the appeal against the discovery assessment was allowed.

Citation
[2018] UKFTT 355
Parties
Appellant: Siraj Ahmed; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
27 June 2018
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal against discovery assessment allowed; appeal against closure notice allowed in principle.
Legal Topics
Income Tax, Profits of Trade, Conditional Fee Agreements, Accounting Basis, Discovery Assessment, Closure Notice
Tax Law Income Tax Profits of Trade Conditional Fee Agreements Accounting Basis Discovery Assessment Closure Notice

Case Brief

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Parties

Siraj Ahmed

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 the appellant's accounting for income from conditional fee agreements (CFAs) complied with the earnings basis required by law
  2. 2 Whether HMRC's adjustments and assessments for the relevant tax years were correct and justified
  3. 3 Whether HMRC was entitled to make a discovery assessment for 2012-13 on grounds of carelessness

Ratio Decidendi

The Tribunal held that while the appellant failed to make necessary adjustments to reflect the earnings basis for CFA income, HMRC's method of estimating adjustments was fundamentally flawed and overstated the required adjustments. The Tribunal found no evidence of carelessness to justify a discovery assessment for 2012-13. The appeal against the closure notice was allowed in principle, and the appeal against the discovery assessment was allowed.

Court Disposition

Appeal against discovery assessment allowed; appeal against closure notice allowed in principle.

Orders

  • The appeal against the discovery assessment for 2012-13 is allowed.
  • The appeal against the closure notice for 2010-11 is allowed in principle; parties to agree any necessary adjustment or apply to the Tribunal within 90 days if unable to agree.