Dishonesty proved

The taxpayer’s father moved £443 669 in March 2009 from his Swiss bank account to his son the taxpayer who was the residual beneficiary of his father’s estate. The transfer was potentially exempt under IHTA 1984 s 3A but the father died seven months later.

The estate’s executors submitted an inheritance tax (IHT) return that did not mention the sum transferred to the taxpayer.

HMRC received anonymous information in July 20111 about the bank account in Switzerland leading the department to assess the taxpayer to IHT on the £443 669 and impose a 35% penalty.

The taxpayer appealed against the fine.

The First-tier Tribunal noted the Revenue alleged a subjective state of mind: that the taxpayer had deliberately withheld information – which was close to an accusation of dishonesty putting the burden of proof on the taxman.

The tribunal found the taxpayer gave inconsistent...