Burden of proof for discovery was met

For many years the taxpayer was a lawyer and adviser to the Ecclestone family interests. Between 1999-2000 and 2012-13 he received six payments which totalled nearly £40m. He did not declare these as income on his self assessment returns claiming that they were gifts and/or not subject to tax.

HMRC disagreed and issued discovery assessments and penalties.

After the First-tier Tribunal dismissed his appeal the taxpayer appealed to the Upper Tribunal on the basis that HMRC had not established that the loss of tax had been brought about carelessly or deliberately (TMA 1970 s 36).

The Upper Tribunal noted that the general time limit for making discovery assessments was four years from the end of the year of assessment to which it related. However if HMRC could show ‘culpable' conduct on the part of the taxpayer that time limit was extended.

In the tribunal’s judgment...