“(1) Subject to the following provisions of this Act, and to any other provisions of the Taxes Acts allowing a longer period in any particular class of case, an assessment to income tax or capital gains tax may be made at any time not more than 4 years after the end of the year of assessment to which it relates.”
“(1) An assessment on a person in a case involving a loss of income tax or capital gains tax brought about carelessly by the person may be made at any time not more than 6 years after the end of the year of assessment to which it relates (subject to subsection (1A) and any other provision of the Taxes Acts allowing a longer period). (1A) An assessment on a person in a case involving a loss of income tax or capital gains tax (a) brought about deliberately by the person, … may be made at any time not more than 20 years after the end of the year of assessment to which it relates (subject to any provision of the Taxes Acts allowing a longer period).”
“4. I have been involved in property development for over 40 years. I have a particular interest in brown field redevelopment. I have also bought and sold properties. In some instances I have let residential properties before selling them. I have operated as a sole trader, I have been in partnership and I have been a shareholder and director of various companies set up for particular projects. (Exhibit 1) 5. From 2006 until 2012 I was employed as a managing director of Bovale Limited. For the prior ten years I had worked with Bovale under a Land Agent contract which involved payment by an annual retainer and then payment by commission according to the sites which I brought to the business. The move to become managing director extended that role. As managing director, my main duties for Bovale Limited were to find sites for the company to develop and to help to develop them prior to sale. I was paid a salary and expenses but the main element of my remuneration was through a success fee of 10% on the net profit of site sales. (Exhibit 2). 6. The annual turnover of Bovale Limited was around£100m . My own annual income, as reflected in tax returns from 2005 – 2012, was regularly in six figures and in tax year 2008/09 was over£2m [Exhibit 3]. The income came from employment at Bovale, from partnership income, from dividends, from rental income and from interest. The latter two sources generated only small amounts of income. The work for Bovale and the partnership, together with the work from the various transactions being carried out through special purpose corporates meant that my working week was regularly in excess of 70 hours and sometimes more. 7. Over the course of my career I have developed relationships with a band of professionals. I am very dyslexic. I was diagnosed as a child. I have a reading age of 12. Consequently it is very important for me to work with a small team of people together with a range of professional firms whom I trust. Over the period 2005 -12 the core team for my business consisted of myself, Sally Topham and [PD]. Accountancy services were generally provided by [PC] although for some companies which I had set up other accountants were used…. I first worked with [PC] in the late 1980s when he was at [an accountancy firm]. He had been recommended to me by [solicitors] in Bristol as someone who was competent and thorough. This proved to be the case. When he moved [firms] in April 2001 I followed him. (Exhibit 4). When he set up his own business… in September 2004 I again followed him (Exhibit 5). I believe that I was his first client in his new venture. I remained with [PC] as he moved from firm to firm because I valued and trusted his judgement. … 14. The centrality of [PC] to my financial affairs is reflected in the fact that when I asked [solicitors] to prepare a will for myself, they wrote to [PC] on9 February 2009 . They explained their understanding of the assets held in my estate and how they proposed to deal with them. They asked for [PC]’s views before drafting the will. (Exhibit 13) 15. Given the depth of [PC]’s involvement in the business, a regular flow of information between us was essential. He also prepared tax returns on behalf of my wife. About once a month my wife and I would collect together all documentation relating to our business and personal affairs and put it in a ring folder. This included a wide range of information including: invoices issued; expenditure including car, hotel, entertainment and school fees; credit card receipts; bank statements from the various accounts which we used; correspondence with solicitors and completion statements; my wife’s NHS wage slips. This was collected together over a period of about 3 months. Additionally, where bank statements or phone bills had been received by post at our home in Aberdovey after the file had been provided but which related to that period, my wife would post these to [PC]. 16. As I say at paragraph 7 above, I am very dyslexic. I prefer face-to-face meetings to written correspondence. Regular meetings were held with [PC] to anticipate the quarterly VAT reporting for the C B Collier Partnership which was the responsibility of [PC]. At these meetings, I would bring the ring folder with the documentation gathered over the preceding three months. [PC] would take that and return the ring folder which had been provided for the previous period. 17. Apart from dealing with VAT, these quarterly meetings were used to provide a general catch up on progress in my various business interests. The quarterly meetings would be attended by [PC] and myself. I was always accompanied by Ms Sally Topham or [PD] or both…. documentation would be provided to [PC] reflecting monies into and out of the business and that would be reconciled to bank statements. Progress on current transactions and future plans would be discussed and cash-flow forecasts prepared… 20. Until the mid 2000s I had been very satisfied with the services being provided by [PC] as reflected in my following him from firm to firm. However, there was a deterioration in quality of the work from the mid 2000s. At the time this was felt to be understandable following the death of his son… who was 22 at the time… The death seemed to have resulted from a fall from a roof but there was some suggestion that an unknown party had caused the death, a suggestion which may have compounded the blow to [PC] and his wife. 21. In these circumstances, the missing of information provided (Exhibit 16) and the late preparation and filing of accounts (Exhibits 17 -19) which began to appear in his work was understandable. Unfortunately, these became the norm. He had regular absences from his office and was difficult to contact (Exhibit 20). As indicated above, my business interests are complex and wide-ranging. My team were regularly chasing [PC] for figures, filing penalties were being incurred, there was a lack of consultation over figures appearing in accounts and last minute changes were being made. 22. It has been suggested by HMRC that, given this deterioration in the quality of his work, I should have replaced [PC] earlier than I did. With the benefit of hindsight, I can only agree. However, at the time each missed deadline or each difficulty of contacting him was viewed separately. By the mid 2000s I had been working with [PC] for over 15 years, a period of time in which I had grown to rely on him and trust his abilities. That confidence is not something that is readily sloughed off. Also, given the apparent link between the death of his son and the decline in work standards and given the long-standing relationship between myself and [PC], I was reluctant to terminate the relationship. However, after months of deliberation, after discussing the position with [solicitors] and in consultation with Ms Topham, it was felt that perhaps the move to running his own practice meant that [PC] was missing the back-up available in a larger firm and we began to move some of the corporate work to other accountancy firms (Exhibit 21). 23. Young & Co began to deal with work... Given the clear difference in standards, and given the on-going problems with [PC]’s work, all accounts were moved to Young & Co in October 2011. … 29. The period following the financial crash of late 2007 to 2012 was therefore a difficult time. With the move to Young & Co in 2011, I believed that the various business consequences arising from the deterioration in [PC]’s services such as late filings and financial penalties were behind me and the business could move forward on a more stable footing. At the Code of Practice 9 meeting with HMRC on2 July 2013 (Exhibit 42), when I was asked whether I had a disclosure to make of any tax irregularity I replied “No” with some confidence. 30. Subsequent evidence showed that there were tax irregularities. These are accepted. However, I was not aware of them at the time and there was no intention on my part to file incorrect returns or to provide inaccurate responses to the HMRC enquiries. I have cooperated in an HMRC enquiry which has lasted almost 10 years and I have provided very large amounts of information and documentation. I believe that the large amounts of information and documentation gathered by HMRC support my position that I have always acted in good faith in providing my tax returns. …my assumption is that expenditure would be reconciled to the bank statements including [Bank of Scotland] statements by [PC] as part of his preparation of business accounts. My clear recollection is that at the quarterly meetings held with [PC] he would be provided with both bank statements and cheque stubs. This procedure has been followed with Young and Co. [PC] would cross-reference these and make hand-written notes on the cheque numbers as to what the expenditure related. He would retain the bank statements while preparing accounts and these would then be returned. 48. Business records, including bank statements, were initially stored at my property in Aberdovey. Following my move to Switzerland in 2013, that property was sold and business records together with personal effects and furniture were moved into storage in 2014. The move was organised by Britannia Removals with storage being arranged in a warehouse in Stafford. That warehouse was destroyed by fire in 2016, an event that received considerable coverage in the local media (Exhibit 32) and my records together with the rest of my belongings were destroyed. My subsequent insurance claim was for an amount in excess of£90,000 . 49. Following the start of the COP 9 enquiry and the HMRC concerns that deposits into the [Bank of Scotland] account had not been reflected in the business accounts, HMRC requested copies of [Bank of Scotland] statements. I did not hold copies because of the warehouse fire. However, Young & Co said that they did hold copies from the working papers of [PC] passed to them. These were provided to HMRC. HMRC pointed to the fact that the statements did not cover the full period under review. I therefore approached the Bank which provided the missing statements and these were passed on to HMRC… 53. I accept that the above amounts were underdeclared in my personal tax returns and in the accounts of the Partnership. However, it has been explained to me that to be valid assessments, HMRC need to show that the failure to report accurately was brought about by my deliberate behaviour. I do not accept that any failure to report accurately was the result of my deliberate behaviour. I have at all times acted in good faith and believed the tax returns were correct when they were submitted… 86. I accept that it was my responsibility to exercise reasonable care in ensuring my tax returns were correct. In respect of the amounts of underdeclaration relating to bank interest and to rental income, the amounts involved were minor, I knew that interest and rental income were being declared on my tax returns and had no reason to doubt whether the figures being declared on the returns were correct. In respect of the commissions, the amounts involved were more substantial. At the payment dates of these commissions I was heavily involved in the affairs of Bovale Limited, a company which often had an annual turnover in excess of£100m . My own income was also substantial consisting of employment income, dividends and partnership income as well as small amounts of interest and rent. When accepting these returns I believed any professional problems with [PC], while inconvenient and time consuming, were timing related. He had been my accountant for many years, had full knowledge of my business affairs and full access to my financial records. I did not doubt that the figures in the accounts were correct and I did not identify any concerns when considering the tax return for the periods.”
“I was concerned at the constant late filing of accounts and was not comfortable that often filing of accounts seemed to depend on a last minute review. The decision to move work away from PC was only taken after substantial discussion between Charles and myself. PC had been with Charles for many years. We both had a lot of sympathy for PC and his grief over his son's death in 2006 which affected him very deeply. However, in my role as company secretary this had to be put aside. Similarly, Charles' duty as director meant he had to consider what was the right thing for the various companies. After our initial involvement with Young & Co the difference in quality of work became clear and the decision was taken to move all work away from PC.”
“In our view, a deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with a document that contains an error with the intention that HMRC should rely upon it as an accurate document. This is a subjective test. The question is not whether a reasonable taxpayer might have made the same error or even whether this taxpayer failed to take all reasonable steps to ensure that the return was accurate. It is a question of the knowledge and intention of the particular taxpayer at the time.”
“23. In our view, where a taxpayer suspects that a document contained an inaccuracy but deliberately and without good reason chooses not to confirm the true position before submitting the document to HMRC then the inaccuracy is deliberate on the part of the taxpayer. If it were otherwise then a person who believed there was a high probability that their return contained errors but chose not to investigate would never be subject to a deliberate penalty. However, the suspicion must be more than merely fanciful. Lord Scott of Foscote urged caution in this context in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd[2001] UKHL 1 at [116]: “In summary, blind-eye knowledge requires, in my opinion, a suspicion that the relevant facts do exist and a deliberate decision to avoid confirming that they exist. But a warning should be sounded. Suspicion is a word that can be used to describe a state-of-mind that may, at one extreme, be no more than a vague feeling of unease and, at the other extreme, reflect a firm belief in the existence of the relevant facts. In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to avoid obtaining confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity.” 24. Although the concepts of blind-eye knowledge and recklessness as to the truth or falsity of a statement may intersect, they are clearly not identical. As we have already stated, HMRC did not ask us to consider whether an inaccuracy is deliberate where a taxpayer is reckless as to whether the document contains any errors. In the absence of any argument on the point from HMRC, and because it is not necessary for the purposes of this decision, we do not consider whether recklessness is a sufficient basis for determining that an inaccuracy is deliberate further in this decision, and make no comment either way.” “In summary, blind-eye knowledge requires, in my opinion, a suspicion that the relevant facts do exist and a deliberate decision to avoid confirming that they exist. But a warning should be sounded. Suspicion is a word that can be used to describe a state-of-mind that may, at one extreme, be no more than a vague feeling of unease and, at the other extreme, reflect a firm belief in the existence of the relevant facts. In my opinion, in order for there to be blind-eye knowledge, the suspicion must be firmly grounded and targeted on specific facts. The deliberate decision must be a decision to avoid obtaining confirmation of facts in whose existence the individual has good reason to believe. To allow blind-eye knowledge to be constituted by a decision not to enquire into an untargeted or speculative suspicion would be to allow negligence, albeit gross, to be the basis of a finding of privity.”
“34. As regards the Supreme Court’s reference to recklessness in the context of deliberate conduct, this topic had already been discussed in a few First-tier Tribunal cases. In [Clynes v HMRC[2016] UKFTT 369 (TC) ], the Tribunal considered that the definition of ‘deliberate inaccuracy’ extends beyond actual knowledge of the inaccuracy [86]: “…Our view is that, depending on the precise circumstances, an inaccuracy may also be held to be deliberate where it is found that the person consciously or intentionally chose not to find out the correct position, in particular, where the circumstances are such that the person knew that he should do so. A person cannot simply escape liability by claiming complete ignorance where the person clearly knew that he should have taken steps to ascertain the position. We view the case where a person makes such a conscious choice not to take such steps with the result that an inaccuracy occurs, as no less of a ‘deliberate inaccuracy’ on that person’s part than making the inaccuracy with full knowledge of the inaccuracy.” 35. This interpretation was supported by the First-tier Tribunal in [Soleimani-Mafi v HMRC[2018] UKFTT 451 (TC) ] in which it was held that as the appellant had information which indicated that there may be tax consequences resulting from his actions, his failure to establish the correct legal and tax implications of his actions meant that he deliberately submitted an incorrect return [88] et seq. 36. Further support can be found in the First-tier Tribunal decision of [Cation v HMRC[2021] UKFTT 311 (TC) ] in which it was held that the appellant would have had the awareness and the means to gather information related to his claim for tax relief, his failure to do so meant that the inaccuracy in question was ‘deliberate’ [86] et seq.” “…Our view is that, depending on the precise circumstances, an inaccuracy may also be held to be deliberate where it is found that the person consciously or intentionally chose not to find out the correct position, in particular, where the circumstances are such that the person knew that he should do so. A person cannot simply escape liability by claiming complete ignorance where the person clearly knew that he should have taken steps to ascertain the position. We view the case where a person makes such a conscious choice not to take such steps with the result that an inaccuracy occurs, as no less of a ‘deliberate inaccuracy’ on that person’s part than making the inaccuracy with full knowledge of the inaccuracy.”