Income belongs to someone else

Liability to tax on dividends and car benefit

The taxpayer alleged that she had been in an abusive relationship and had accepted an appointment as the director of a company only because her ex-partner (W) had been disqualified as a director. It is noted in the decision that W was not called as a witness and therefore did not have the opportunity to state his version of events.

HMRC enquired into the taxpayer’s returns for the years 2007-08 to 2013-14. It concluded she had underdeclared her income. It amended the assessments for 2007-08 to 2008-09 and raised discovery assessments for 2009-10 to 2010-11. It also issued penalties.

The taxpayer appealed. She said she had not received the dividends from the company. The First-tier Tribunal accepted her account. The judge said although legally the shareholder it was clear she held the share on trust for her ex-partner. She had...