A taxpayer has lost his case at the Upper Tribunal (UT) meaning that he will have to pay an almost £1m tax bill without having to the opportunity to defend his position. The taxpayer held that he was Irish domiciled and wasn’t subject to tax on his non-UK source income.
HMRC requested information from the taxpayer to prove his alleged domicile status but the taxpayer failed to comply. Eventually in September 2017 HMRC issued assessments and penalties holding that the taxpayer had acted deliberately in hiding his tax affairs. The taxpayer appealed to the First-tier Tribunal (FTT).
The taxpayer failed to appoint legal representation and continually failed to provide the information requested by the FTT resulting in the FTT having to issue to Unless Orders. The taxpayer failed to comply with the Unless Orders and his case was struck out. The taxpayer eventually appointed legal representatives and they applied for the case to be reinstated.
The FTT allowed the case to be reinstated but HMRC appealed this reinstatement decision to the UT. The UT has now found that the FTT made material errors when applying the relevant tests to allow cases to be reinstated and that these errors might have impacted its decision. On review of the authorities, the UT remade the FTT’s reinstatement decision against the taxpayer holding that his non-compliant behaviour was of such a serious nature that allowing the reinstatement would prejudice HMRC.
The decision can be found at: THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS v MICHAEL BREEN [2023] UKUT 00252 (TCC) – GOV.UK (www.gov.uk)
This is a cautionary tale, an almost £1m charge is a considerable amount made worse by the taxpayer’s non-compliant behaviour.
Please contact if you have any questions on income tax and negotiations with HMRC. The above case highlights that not staying on top of correspondence with HMRC, the courts and tribunals can negatively impact any appeal considered. An almost £1m charge is an expensive charge for not corresponding effectively.
