Chapman v Revenue & Customs [2011] UKFTT 756 (TC) (22 November 2011)

Chapman v Revenue & Customs [2011] UKFTT 756 (TC) (22 November 2011)

The tribunal found that the Revenue's takings build-up for the 2006/07 enquiry year overestimated the appellant's turnover and omitted sales, given the nature of the business, the appellant's health and lifestyle, and the lack of evidence supporting a higher throughput. The application of the takings build-up and Retail Price Index to other years was unjustified due to lack of evidence and the specific nature of transactions in the enquiry year. The assessments for years other than 2006/07 could not stand and must be reduced to nil. For 2006/07, the tribunal determined a realistic turnover of £60,000, reducing the omitted sales and corresponding tax due.

Citation
[2011] UKFTT 756 (TC)
Parties
Appellant: William Chapman; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
22 November 2011
Procedural Posture
Tax Appeal / First Tier Tribunal (tax), Substantive Hearing and Decision
Outcome
Appeal allowed in principle; assessments for 2004/05, 2005/06, and 2007/08 reduced to nil; 2006/07 assessment reduced based on revised turnover.
Legal Topics
Income Tax, Corporation Tax, Self Assessment, Discovery Assessments, Negligence in Tax Returns, Business Records, Calculation of Turnover, Gambling Proceeds, Retail Price Index Application, Presumption of Continuity, Onus of Proof
Tax Law Income Tax Corporation Tax Self Assessment Discovery Assessments Negligence in Tax Returns Business Records Calculation of Turnover +4 more

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Parties

William Chapman

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax), Substantive Hearing and Decision

Legal Issues

  1. 1 Whether the appellant was overcharged by the tax assessments for 2004/05 to 2007/08
  2. 2 Whether the appellant negligently delivered incorrect returns and omitted sales
  3. 3 Adequacy of business records and method of calculation of turnover and profit

Ratio Decidendi

The tribunal found that the Revenue's takings build-up for the 2006/07 enquiry year overestimated the appellant's turnover and omitted sales, given the nature of the business, the appellant's health and lifestyle, and the lack of evidence supporting a higher throughput. The application of the takings build-up and Retail Price Index to other years was unjustified due to lack of evidence and the specific nature of transactions in the enquiry year. The assessments for years other than 2006/07 could not stand and must be reduced to nil. For 2006/07, the tribunal determined a realistic turnover of £60,000, reducing the omitted sales and corresponding tax due.

Court Disposition

Appeal allowed in principle; assessments for 2004/05, 2005/06, and 2007/08 reduced to nil; 2006/07 assessment reduced based on revised turnover.

Orders

  • Parties to agree the amount of tax due for 2006/07 based on a turnover of £60,000 and omitted sales of £17,223.
  • Penalties and interest to be recalculated on the reduced figures for 2006/07.