Not a trading receipt

The taxpayer ran a business buying and selling plant and machinery. He opened an account in Guernsey which he disclosed to HMRC in 2007 taking advantage of the department’s offshore disclosure facility.

The Revenue decided to carry out an enquiry into the taxpayer’s affairs which resulted in assessments for income tax VAT and penalties totalling £500 000 in respect of under-declared trading profits and under-declared bank interest.

The taxpayer appealed. He said a credit of £535 478 was a loan from his father and not a taxable receipt of the business and further expenses should be taken into account. He also argued that the fines were too high.

The First-tier Tribunal concluded that the sum of money described by the taxpayer as a loan was not a trading receipt “on the balance of probabilities” and the origin of the money was as “proceeds probably...