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HMRC imposed a penalty at 70% in respect of capital gains tax on the sale of two properties, which the taxpayer had failed to disclose in his tax return.
He appealed on the ground he had relied on his accountant.
The First-tier Tribunal judge, Geraint Jones QC, agreed it was for HMRC to establish that the taxpayer had been negligent – and he would be liable to a penalty only if he had been shown to be negligent.
Mr Jones said both the taxpayer and his accountant knew the gains on the properties should be subject to capital gains tax.
The advice given to the taxpayer had clearly been wrong, and the taxpayer should at least have asked for further information as to why no tax was due.
A penalty was due in this instance, but because the taxpayer had been badly served by the accountant, the judge reduced the fine to 30%.
