Elsina v HMRC

In Elsina v HMRC [2015] UKFTT 0014 (14 January 2015) the FTT found that an inaccuracy in a corporation tax return was careless.

Elsina is an overseas company carrying on business in the UK through a London branch. Following an enquiry into Elsina’s corporation tax return HMRC considered that dividends which had been omitted from Elsina’s taxable income were taxable. Elsina’s tax accountant amended the return accordingly. HMRC sought to impose a penalty for inaccuracy under FA 2007 sch 24.

The penalty could be imposed if the inaccuracy was careless or deliberate. The FTT noted that in the case of a ‘substantial and sophisticated operation’ like Elsina it was appropriate to expect a degree of expertise when carrying out tax compliance tasks. Elsina’s tax adviser had simply assumed that the relevant dividends fell within the general rule whereas under CTA 2009 s 931W they fell...