In Michael Burgess and Brimheath Developments v HMRC [2015] UKUT 578 (27 October 2015) the UT found that discovery assessments should be reduced to zero even though the under-declaration of income was established.
The appeal related to discovery assessments for income tax in relation to alleged failures by Mr Burgess to declare business profits as a sole trader and to discovery assessments for corporation tax in relation to alleged under-declarations of profits by Brimheath. The FTT had upheld the assessments. The focus of the appeal to the UT was their validity.
The UT noted that the FTT had concentrated solely on substantive issues. It concluded that in the absence of a positive case put by HMRC in relation to its competence (whether the conditions for making a discovery were satisfied) and time limits (TMA 1970 ss 29 and 34 and FA 1998 Sch 18 paras 42 and 46)...
