.png)
.png)
J Herbert (TC4395)
The taxpayer submitted no returns from 1992 until 31 January 2005, when he filed for 2003/04. He later sent forms for the years back to 1996/97, and one for 2004/05.
Disputes arose on his liability to tax and class 4 National Insurance arising from his motor agency business, rental income, and a beach café.
HMRC raised assessments on the motor business, against which the taxpayer appealed on the ground the figures were estimates.
The First-tier Tribunal concluded that the taxpayer did not keep proper books or records. By his own admission, he sometimes received cash payments, which he spent before banking. The figures he provided in his return for the business were no more than “an educated guess as to his level of taxable income”.
The tribunal decided the Revenue’s method of estimating profits was “not perfect” but produced a reliable result.
The taxpayer claimed his mother owned the cafe of which he was an employee – but he could not produce a statement from his mother to that regard, nor did he have payslips that showed he had received employment income.
HMRC had a letter from the taxpayer’s adviser, stating that the taxpayer “ran the café”. The tribunal agreed with the tax department that the word “ran” meant the taxpayer carried on the café business, and was not an employee. The judge upheld the Revenue’s assessments.
The tribunal found that the taxpayer offered no evidence as to the true level of income and expenses from his rental business. His adviser asserted that tax officials should have obtained information from the local district council about top-up payments it made on tenants’ behalf.
The tribunal disagreed, saying the obligation to produce accurate information lay with the taxpayer.
The taxpayer had “shown a disregard of his obligations to make full, accurate and timely returns” of income, and had been “less than forthcoming” with the Revenue. He had “only himself to blame” if he felt overcharged by the assessments.
The taxpayer’s appeal was dismissed.
