Hayes v Revenue & Customs (INCOME TAX - loan interest relief disallowed) [2020] UKFTT 266 (TC) (23 June 2020)

Hayes v Revenue & Customs (INCOME TAX - loan interest relief disallowed) [2020] UKFTT 266 (TC) (23 June 2020)

HMRC validly issued discovery assessments under s 29 TMA 1970 because the discovery occurred only after the Acornwood decision, there was no prevailing practice supporting the appellant's claim, the hypothetical officer would not have been aware of the insufficiency within the enquiry window, and the delay in issuing assessments did not render them stale given ongoing engagement with the appellant.

Citation
[2020] UKFTT 266
Parties
Appellant: William Hayes; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
23 June 2020
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Final Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Loan Interest Relief, Discovery Assessments, Practice Generally Prevailing, Staleness of Assessments
Tax Law Income Tax Loan Interest Relief Discovery Assessments Practice Generally Prevailing Staleness of Assessments

Case Brief

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Parties

William Hayes

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether HMRC validly issued discovery assessments under s 29 TMA 1970 for disallowance of loan interest relief claimed by the appellant.
  2. 2 Whether the appellant's tax returns were made in accordance with the practice generally prevailing at the time, thus precluding assessment under s 29(2) TMA 1970.
  3. 3 Whether the hypothetical officer could have been reasonably expected to be aware of the insufficiency of tax within the enquiry window under s 29(5) TMA 1970.

Ratio Decidendi

HMRC validly issued discovery assessments under s 29 TMA 1970 because the discovery occurred only after the Acornwood decision, there was no prevailing practice supporting the appellant's claim, the hypothetical officer would not have been aware of the insufficiency within the enquiry window, and the delay in issuing assessments did not render them stale given ongoing engagement with the appellant.

Court Disposition

Appeal dismissed

Orders

  • Discovery assessments for the years ended 5 April 2011 and 5 April 2012 upheld; loan interest relief disallowed.