Taxpayer’s behaviour was careless rather than deliberate

The taxpayer was a successful music composer and producer. He operated his business as a sole trader. He also bought a vineyard in France and set up a wine business.

The taxpayer had a history of submitting late tax returns. As a result of his failure to file any returns from 2004-05 to 2013-14 HMRC raised discovery assessments determinations and penalties. The fact that whenever HMRC issued a demand for tax the taxpayer paid it caused officers to question his level of income.

Eventually the taxpayer filed tax returns for the years 2004-05 to 2009-10 including claims for sideways loss relief for losses from the wine business against his sole trade income.

HMRC take into account the sideways loss relief to reduce the amounts charged in the discovery assessments. The taxpayer appealed.

HMRC argued that the taxpayer had deliberately not submitted tax returns so that...