Reasonable action

Reliance on professional advice

The first taxpayer (AC) inherited a house from her late mother in 1988. It was let from 1998 to 2010 and was sold on 23 July 2010. For three weeks before completion the taxpayers moved into the house. They claimed only or main residence relief for the property but HMRC refused it. When the matter came to the First-tier Tribunal the taxpayers accepted the only or main residence elections were wrong but continued their appeal against the penalties imposed by HMRC for inaccurate returns.

They did not dispute that their returns were incorrect but said the carelessness was on the part of their adviser and therefore fell within FA 2007 Sch 24 para 18. AC said she was undergoing medical treatment when the time came to complete her return and had relied on her tax adviser to do ‘a good job’. She added...