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 2006/07 overestimated the appellant's turnover and was not justified for other years; the appellant's business records were inadequate but the Revenue's methodology could not be reliably applied across all years. The only sustainable adjustment was for 2006/07, reducing omitted sales to £17,223 based on a realistic turnover of £60,000. Assessments for other years could not stand due to lack of evidence and inappropriate application of RPI. Penalties and interest to be reduced accordingly.

Citation
[2011] UKFTT 756
Parties
Appellant: William Chapman; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
22 November 2011
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax), Final Decision
Outcome
Appeal allowed in principle; assessments for 2004/05, 2005/06, and 2007/08 reduced to nil; 2006/07 assessment reduced to reflect omitted sales of £17,223; penalties and interest to be reduced accordingly.
Legal Topics
Income Tax Assessments, Self Assessment, Discovery Assessments, Negligence in Tax Returns, Business Records Adequacy, Calculation of Turnover and Profit, Gambling Funds and Tax, Application of Retail Price Index, Presumption of Continuity, Onus of Proof, Taxes Management Act 1970
Tax Law Income Tax Assessments Self Assessment Discovery Assessments Negligence in Tax Returns Business Records Adequacy Calculation of Turnover and Profit Gambling Funds and Tax +4 more

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Parties

William Chapman

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax), Final Decision

Legal Issues

  1. 1 Whether the appellant was overcharged by tax assessments for 2004/05 to 2007/08
  2. 2 Whether the appellant negligently delivered incorrect returns
  3. 3 Whether omission of sales occurred

Ratio Decidendi

The Tribunal found that the Revenue's Takings Build-Up for 2006/07 overestimated the appellant's turnover and was not justified for other years; the appellant's business records were inadequate but the Revenue's methodology could not be reliably applied across all years. The only sustainable adjustment was for 2006/07, reducing omitted sales to £17,223 based on a realistic turnover of £60,000. Assessments for other years could not stand due to lack of evidence and inappropriate application of RPI. Penalties and interest to be reduced accordingly.

Court Disposition

Appeal allowed in principle; assessments for 2004/05, 2005/06, and 2007/08 reduced to nil; 2006/07 assessment reduced to reflect omitted sales of £17,223; penalties and interest to be reduced accordingly.

Orders

  • Parties to agree the amount of tax due for 2006/07 based on omitted sales of £17,223.
  • Assessments for 2004/05, 2005/06, and 2007/08 reduced to nil.