In A Bayliss v HMRC [2016] UKFTT 500 (14 July 2016) the FTT found that the taxpayer had been neither negligent nor fraudulent when completing his tax return on the basis that he had implemented a successful scheme which had subsequently failed.
Mr Bayliss had claimed a capital loss and sought to set it off against capital gains in two consecutive tax years. He now accepted that the loss had not been available as the scheme he had implemented had failed. HMRC contended that he had fraudulently or negligently delivered incorrect self-assessment returns; and sought to impose penalties.
The FTT noted that an allegation of fraud ‘is a serious one’ and disagreed with all the arguments put forward by HMRC to establish fraudulent behaviour. In particular the FTT noted that the fact that Mr Bayliss had claimed a tax loss in the absence of economic...
