Burden of proof in disproving assessments

The taxpayer arrived in the UK in 1996 from Iran where he had inherited valuable assets. He had a background in ships aircraft and engineering. He set up business as a sole trader and also a limited company. He had appealed against income tax and VAT assessments raised for multiple years and associated income tax and VAT penalties some of which the First-tier Tribunal allowed.

The taxpayer appealed against the income tax assessments and a VAT assessment which the First-tier Tribunal upheld. The FTT had not been satisfied on the balance of probabilities that the deposits in dispute were not trading income as claimed by the taxpayer. He argued that the sums represented bank loans interest-free loans made by a named friend and business associate and transfers from other accounts.

The Upper Tribunal said the burden of proof rested with the taxpayer to show...