Omissions in return were not deliberate

The taxpayer who had dyslexia and a low reading ability was a sole trader who relied on professional advisers to prepare and submit his personal and partnership tax returns. He held regular meetings with his accountant with whom he had a long-standing relationship. However after a family tragedy there was a decline in the accountant’s work which resulted in omissions - relating to sums paid into a bank account - from the taxpayer’s returns.

After a lengthy investigation HMRC issued discovery assessments and penalties. The taxpayer did not dispute the assessments but because HMRC had relied on the extended time limits for deliberate conduct argued that the assessments were out of time.

The First-tier Tribunal agreed with the taxpayer. The judge found that HMRC had failed to demonstrate that the taxpayer knew of the omissions or that he had ‘blind eye knowledge’ ...