Inadequate information provided to HMRC

Mr S created an online platform for musicians called Gearslutz. He funded it through advertising. He incorporated the business in 2011.

Three years later a new firm of advisers told Mr S that the intangible assets of the company had substantial value and suggested it be amortised in the accounts as having been acquired in 2011.

HMRC enquired into Mr S’s self assessment return for 2014-15 and also the company’s corporation tax return. It issued regulation 80 determinations under The Income Tax (PAYE) Regulations) SI 2003/ 2682 to the company for 2014-15 and 2015-16 as a protective measure. It found that there were no agreements for the transfer of the intangible property and suspected it may have been part of an avoidance scheme involving amortisation relief claims.

Indeed the report notes that HMRC had conducted a dawn raid on the advisers because it was concerned they were promoting a tax...