Uncooperative behaviour not deliberate concealment.

In a very recent tax case ‘Romie Tager and others v HMRC” the Court of Appeal concluded that no matter how uncooperative the taxpayer may have been with HMRC, it was wrong to characterise his behaviour as deliberate concealment.

About the author

Mark Taylor

+44 (0)20 7556 1243

The taxpayer inherited his father’s estate in 2005. However, in the absence of a will, an assessment of the size of the estate was provided to HRMC only four years after the demise of his father. After failing to provide satisfying information, HMRC has estimated that the income tax at risk to amount to £235,112 later on reduced to £89,361 and total IHT of £1,103,210. Daily penalties were charged due to the taxpayer’s failure to respond to information notices. Furthermore, following the taxpayer’s failure to comply, tax geared penalties were charged based on HMRC’s estimates. Total amount of penalties rose to £1,246,020. The income tax liability had subsequently been agreed at £1,250, but the IHT remained in dispute, as HMRC still considered it to exceed £1m.

Judge Colin Bishop of the First Tier Tribunal concluded that he was “satisfied that a penalty of 100% of the tax at risk, namely £1,171,020, must be imposed for Mr Tager’s failure to comply with the inheritance tax notice.”

However, the Court of Appeal concluded that the Upper Tribunal was wrong to simply accept HMRC’s necessarily speculative figures without applying some discount to reflect their uncertainty. Therefore, the correct approach was to avoid drawing comparisons with other penalty regimes and to substitute a figure, which “yields a result which is proportionate to the scale and nature of the taxpayer’s default”. It therefore imposed a round sum of £20,000 for failure to comply with income tax notices, and £200,000 for the failure to comply with the IHT notice, a significant reduction from the penalties imposed by the Upper Tribunal.

Mark Taylor, Head of Tax Investigations and Dispute Resolution at Buzzacott, said of this case “This case highlights the dangers where HMRC relies on estimates to calculate not only the tax exposure but also a tax geared penalty. If the estimate is excessive, so will the tax and the penalty. HMRC should limit its allegation of deliberate concealment to situations where they can legitametly adduce evidence of dishonesty.”

For further guidance and advice tailored to your specific circumstances, please speak to your usual Buzzacott contact or Mark Taylor on 0207 556 1243.  To leave an enquiry, please complete the form below:  

Note: all fields are subject to a 255 character limit.

Please complete all required fields above.
You might also be interested in… Tax investigations and resolving disputes.

Guidance from start to resolution

Our service is designed to tailor a strategy to suit your unique needs for reaching resolution with HMRC as quickly and cost-effectively as possible. Our team of tax experts include ex-HMRC Senior Investigators and Inspectors who understand HMRC’s mind-set and can handle any investigation or disclosure for you directly and support you at every stage of the process. 

If your case involves other advisors – such as solicitors or accountants – it’s no problem to mesh our services with theirs. We regularly join forces with other firms to support our clients. We are about easing the process and reaching the best outcome, whilst always complying with tax regulations and legislation.

Our clients have told us that we deliver on our promises, provide honest, open and regular communication that is easy to understand and take an active interest in their case.

Whatever business or industry you’re in, whatever the tax issue may be, you’ll get clear relevant guidance at a fair price agreed upfront. We value our clients and we pride ourselves for always being honest and upfront at all times. 

Specialists in tax investigation and resolving disputes

Download these useful resources:
Buzzacott Tax Investigations and Dispute Resolution brochure

What do our clients say?
Find out what our clients have to say when using Buzzacott's Tax Investigations and Dispute Resolution team