HMRC site ‘careless’ behaviour to avoid being time barred

CTM was instructed by the director of a hotel group in the successful Tribunal appeal of a £600,000 HMRC Discovery Assessment.

It centred around the director’s 2013/14 personal tax return, with that year’s liability changing due to the company writing off his director’s loan in its March 2016 accounts.

The recently instructed company accountant did not have all the earlier financial data and immediately engaged with HMRC to agree the actual amount of the director’s loan that could be written off.

Any adjustment to the amount of the director’s loan to be written off naturally affected the personal tax liability of the director. HMRC’s Corprtation Tax (CT) Team stated they would manage both the company and personal tax position and the director waited for that process to conclude.

However, Officers neglected to deal with the personal tax issue until October 2018, when they were 6 months out of time, and decided to allege carelessness that extended their deadline for raising an assessment to 6 years.

HMRC’s only argument at the Tribunal hearing this month was that the director should have also notified the HMRC team that deals with income tax and should not have left it to the CT Team. The Tribunal agreed with our arguments that there is nothing in statute that states a change to a personal tax liability needs to be notified to any particular HMRC team and, in any event, the CT Team had agreed to deal with the personal tax issue.

The appeal was successful and resulted in the director’s £600,000 Discovery Assessment being reduced to zero.

HMRC miss deadlines at times, and we would advise anyone receiving a tax assessment to first look at time-limits.

2023-12-12T08:59:00+00:00 December 8th, 2023|Tax Court Judgements|