Date of transfer of business to company

The taxpayers were partners in a partnership and were also shareholders in a company. In 2005 the business of the partnership was transferred to the company.

The taxpayers’ position was that the transfer took place on 31 March or 1 April 2005 so there was no partnership income for 2005-06.

However as a result of evidence which HMRC found after raiding the premises of the taxpayer’s former accountant - Christopher Lunn & Co whose principal in 2015 was found guilty of cheating the public revenue and received a custodial sentence - the department decided the transfer of the partnership business took place on 2 August 2005. It raised discovery assessments for partnership income for 2005-06.

The partners had also – on the advice of their then accountant Lunn - signed partnership and individual returns which were consistent with the partnership having traded in 2005-06.

The taxpayers appealed.

The First-tier...