Craig v Revenue & Customs [2012] UKFTT 90 (TC) (27 January 2012)

Craig v Revenue & Customs [2012] UKFTT 90 (TC) (27 January 2012)

The Appellant failed to prove that the sums invoiced by his limited company were for services actually performed by the company during the relevant period. The evidence showed the services related to work done before the company existed. Therefore, the deductions were not allowable as claimed, and the Revenue was justified in disallowing them to the extent of at least £96,466.

Citation
[2012] UKFTT 90
Parties
Appellant: William Craig; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
27 January 2012
Procedural Posture
Tax Appeal / First Tier Tribunal (tax) Decision on Appeal
Outcome
Appeal refused on principal outstanding issue; agreement reached on three subsidiary issues.
Legal Topics
Income Tax, Corporation Tax, Self Assessment, Deductible Expenses, Accruals Basis Accounting, Tax Avoidance, Penalties
Tax Law Income Tax Corporation Tax Self Assessment Deductible Expenses Accruals Basis Accounting Tax Avoidance Penalties

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Parties

William Craig

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax) Decision on Appeal

Legal Issues

  1. 1 Whether sums specified in two invoices (£110,000) rendered by Appellant’s limited company to himself as sole trader are deductible expenses for computing taxable profits for 2006/2007
  2. 2 Whether services were actually performed by the company and, if so, when
  3. 3 Whether profits were computed in accordance with generally accepted accounting practice (accruals basis)

Ratio Decidendi

The Appellant failed to prove that the sums invoiced by his limited company were for services actually performed by the company during the relevant period. The evidence showed the services related to work done before the company existed. Therefore, the deductions were not allowable as claimed, and the Revenue was justified in disallowing them to the extent of at least £96,466.

Court Disposition

Appeal refused on principal outstanding issue; agreement reached on three subsidiary issues.

Orders

  • Appeal on deductibility of £110,000 invoices refused in principle.
  • Parties to submit proposals on penalties within six weeks or a hearing will be fixed.