Wrong return

The taxpayer operated a newsagent’s business in partnership with his wife son and daughter-in-law. In 2000 they took on a subpost office which was incorporated in the shop.

The partnership was incorporated in 2002 and was paid £70 400 for the transfer of goodwill to the company. The taxpayer was appointed subpostmaster and arranged for the salary to be paid in to the partnership’s account.

In 2004 Post Office Ltd decided to close the sub-post office and paid the taxpayer £89 545 compensation. He was advised by Post Office Ltd that the part of the payment relating to compensation for loss of office would be taxable under ITEPA 2003 s 401 subject to the £30 000 exemption.

The compensation was paid into the company’s accounts and the taxpayer did not include any on his personal self-assessment...