Tooth decision is a triumph for common sense

In dismissing HMRC’s appeal in CRC v Tooth [2021] UKSC 17 the Supreme Court made two fundamental findings relating to discovery assessments.

First for there to be a ‘deliberate’ inaccuracy in a document there must be an intention to mislead HMRC or perhaps recklessness. Secondly there is no concept of ‘collective knowledge’ or of ‘staleness’.

However grey areas remain. Statutory references are to TMA 1970 unless otherwise specified.

The facts

Raymond Tooth was a participant in the Romangate tax avoidance scheme entered into by some 500 individuals and vouched for by leading counsel. The scheme purported to set off employment-related losses against income for the previous year under ITA 2007 s 128. It was never suggested that Mr Tooth did not genuinely believe it to be legitimate.

In 2009 Mr Tooth’s advisers prepared his return for 2007-08. They used...