Nature of inaccuracy on self-assessment return

The taxpayer was a qualified accountant but had not practised for several years. In July 2013 he moved to Monaco and ceased to UK resident. He submitted his 2013-14 tax return for on the basis that he was not UK-resident for the year.

After an HMRC enquiry the taxpayer agreed that his circumstances were within the split year rules and as a result income not previously included in the return was subject to UK tax.

HMRC issued a penalty for a deliberate inaccuracy (FA 2007 Sch 24) against which the taxpayer appealed. He said he was ‘acting on his tax knowledge “which was enough to arrive at the wrong conclusion but not enough to arrive at the correct position”’.

The First-tier Tribunal accepted the taxpayer’s evidence that he had not known about the change in the residence rules and thought he was adopting the...