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Febrey v HMRC

In Febrey v HMRC (TC03530 – 2 May 2014) the FTT dismissed Mr Febrey’s appeal. The taxpayer appealed against discovery assessments to income tax ‘greatly in excess of the figures contained in his tax return’ and the denial of tax credits for tax that would have been payable by the taxpayer’s employer had the relevant amounts actually been paid to him.

The assessments were based on HMRC’s belief that amounts shown as withdrawn in the director’s loan account of the taxpayer over an 18 months period represented his salary. In the absence of any records for the years 2005/06 and 2006/07 the tribunal concluded that the amounts withdrawn as ‘consultancy fees’ and ‘dividends’ did not qualify for the descriptions attributed to them in the company’s accounts. The director’s loan account therefore constituted remuneration in the hands of Mr Febrey. He was therefore liable to income tax and...

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