KS & PK Duhra v HMRC

In KS & PK Duhra v HMRC (TC01182 – 7 June) HMRC formed the opinion that a couple who operated a taxi rental business had underdeclared their profits.

They issued discovery assessments under TMA 1970 s 29 covering the years 1998/99 to 2005/06 inclusive and imposed penalties at the rate of 40% of the tax allegedly evaded.

The First-tier Tribunal reviewed the evidence in detail upheld the assessments for 1998/99 to 2002/03 inclusive in reduced amounts allowed the appeals for 2003/04 to 2005/06 inclusive and reduced the penalties to 20% of the evaded tax.

Why it matters: In the majority of recent cases concerning penalties the Tribunals have upheld the percentage rate imposed by HMRC. This case is worth noting as the Tribunal made a substantial reduction (from 40% of the evaded tax to 20% of...