Inadequate information to displace tax assessments

The taxpayer was a self-employed landscape gardener. HMRC opened an enquiry into his 2014-15 tax return and visited him at his home to review his records. During the meeting the taxpayer confirmed his return was correct.

HMRC later wrote to the taxpayer highlighting discrepancies in his bank account. The taxpayer replied that he had ‘forgotten’ a bank account and that these amounts represented rent from a short-term let.

After further investigation HMRC concluded the property had been let out for several years and that his tax returns for earlier years contained inaccurate information about his income from his business and property. The officer said the taxpayer should have been VAT registered since 2011 and raised discovery assessments for the years 2010-11 to 2013-14 with estimated figures based on a presumption of continuity. The officer also imposed penalties were raised for deliberate behaviour but were reduced to 60% for telling...