Equitable result

The taxpayer was made bankrupt in 2005 with HMRC as sole petitioning creditor.

Prior to this he had failed to provide self-assessment tax returns for the years 1996/97 to 2005/06 and he had not paid estimated assessments raised by the departments for those years.

In 2008 the taxpayer’s accountant submitted the outstanding returns. HMRC accepted these and made statutory adjustments. They also accepted the returns relating to the years which were out of date under the equitable liability procedure.

These actions substantially reduced the taxpayer’s debt to HMRC so that it comprised only of unpaid Class 2 National Insurance contributions and the costs of the bankruptcy.

HMRC decided not to pursue the Class 2 National Insurance liability by concession. Despite no tax or National Insurance now being due the taxpayer pursued his appeal on the ground that HMRC had not followed the correct procedure in 2005.

He claimed...