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The taxpayer was in business as a motor mechanic. After an investigation into his tax returns for 2006/07 HMRC concluded the turnover for the year had been underdeclared by £94 891.
The inspector applied the retail prices index to increase the declared turnover for the years 2004/05 2005/06 and 2007/08. She subsequently sent an offer of settlement for around £60 000 including interest and penalties.
The taxpayer declined the offer.
His adviser said that in 2006/07 much income derived from gambling activities. And although the taxpayer's records may not have been in the format required by the Revenue they were adequate and complete.
There was no evidence of omitted sales and HMRC’s suggested turnover figure would be impossible for such a small garage to achieve claimed the adviser. She described the taxman's method of estimating the figures as artificial with no hard evidence...
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