Reasonable penalties?

The taxpayer had been in a lengthy dispute with the Revenue about benefits and undeclared income. He appealed against assessments and penalties – 50% of the tax due – for the years 1992/93 to 2002/03.

The First-tier Tribunal judge said there had been “misunderstandings on both sides” but the question of fines had to be judged according to the behaviour of the taxpayer “in initially making his return and in later disclosure and co-operation and although the extent of cooperation must be judged against the reasonableness of requests made by HMRC the bald questions as to whether HMRC acted reasonably in their enquiry or assessments are not… relevant to the percentage mitigation which should be applied”.

The taxpayer might have been told the benefits were not connected with his employment but it did not alter the fact considerable benefits were not disclosed. The judge concluded that...