David Anderson & Anor v The Commissioners for HMRC [2026] UKFTT 1229 (TC)

[2026] UKFTT 01229 (TC)Case No TC 09991
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 28 –29 July 2026Date Judgment date: 20 August 2026
Taylor House, London
Appeal references: TC/2019/04288
TC/2019/04881
Income Tax/Capital Gains Tax – Discovery assessments and penalties – Whether discovery assessments valid and in time – If so, whether evidence to displace assessments – Whether First Appellant’s behaviour fraudulent and deliberate – Whether deliberate behaviour by both Appellants – Appeals dismissed
Before
TRIBUNAL JUDGE BROOKSTRIBUNAL MEMBER AGBOOLA
Between
DAVID ANDERSONAppellantLINDA ANDERSONAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentDavid Anderson in-person for himself and Linda Anderson for AppellantsJoshua Carey and Max Schofield, both of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs for RespondentsDECISION

Introduction

[1]The Appellants, Mr David Anderson and Mrs Linda Anderson, appeal against discovery assessments for capital gains tax (“CGT”) and income tax issued by the Respondents (“HMRC”) under s 29 Taxes Management Act 1970 (“TMA”). They also appeal against penalty assessments issued under s 100 TMA and schedule 24 Finance Act 2007 (“FA 2007”). The amounts assessed on Mr and Mrs Anderson are set out in the tables in the Appendix.[2]Mr Anderson represented himself and Mrs Anderson. HMRC were represented by Joshua Carey and Max Schofield, both of counsel.[3]In reaching our conclusions, we have carefully considered and taken into account all of the submissions by and on behalf of the parties together with all of the materials to which we were referred, even if not specifically mentioned in this decision.

evidence

[4]evidence In addition to an electronic bundle comprising 1,805 pages, supplementary bundle of 11 pages and a seven page second supplementary bundle we heard from HMRC Officer Richard Taylor.[5]Officer Taylor, is a Civil Investigator for HMRC’s Fraud Investigation Service Individuals and Business Team. In April 2017 he took over responsibility for the HMRC Code of Practice 9 (“COP9”) investigations into Mr and Mrs Anderson from his colleague, HMRC Officer Roderick McLauchlan. Officer McLauchlan, who retired from HMRC in 2017, had been the “decision maker”, ie the officer who made the decision to issue the CGT and income tax assessments and penalty assessments with which these appeals are concerned.[6]We found Officer Taylor, much of whose evidence was not challenged, to be a credible and helpful witness who at all times sought to assist the Tribunal.[7]Despite being given every opportunity to do so, neither Mr Anderson nor Mrs Anderson chose to give evidence. Mr Anderson explained that rather than give evidence themselves they wished to rely on that given by Officer Taylor adopting the position that HMRC had taken in an interlocutory hearing before Judge Sukul on 15 January 2025 to determine an application for an “unless order” made by HMRC (see paragraph 52, below).

Facts

[8]Facts Mr and Mrs Anderson, both veterinary surgeons, established a veterinary practice which they ran in partnership as equal partners from four locations, Bromley North, Orpington, Biggin Hill and Bromley South. They effectively retired in 2005, leaving the UK to live in Antigua. They left the day-to-day management of the practices to five senior and experienced veterinary surgeons, each working via their own company. Between 2010 and 2012 these veterinary practices were sold to VWJ Limited (“VWJ”), a company which Mr and Mrs Anderson wholly owned, Bromley North on 2 March 2010, Orpington on 21 October 2010, Biggin Hill on 7 April 2011 and Bromley South on 7 April 2012.[9]Other than stating in the “white space” for “any other information” in Mr Anderson’s 2012-13 self-assessment tax return that he had “received capital gains but they have not yet been finalised”, neither Mr Anderson nor Mrs Anderson declared any capital gains in their 2009-10, 2010-11, 2011-12 or 2012-13 self-assessment tax returns. In addition, other than for 2001-02, 2004-05 and 2013-14, in which he declared receipts of income from property, Mr Anderson did not include any income from property in his self-assessment tax returns between 1996-97 and 2014-15 (inclusive).

HMRC Enquiries and Assessments

[10]HMRC Enquiries and Assessments HMRC opened the following enquiries:(1) On 11 April 2013 into VWJ’s corporation tax return for its accounting period ending 31 March 2012;(2) On 18 October 2013 into Mrs Anderson’s 2011-12 self-assessment tax return;(3) On 14 January 2014 into Mrs Anderson’s 2009-10 and 2010-11 self-assessment tax returns;(4) On 14 January 2014 into Mr Anderson’s 2009-10 and 2010-11 self-assessment tax returns;(5) On 10 March 2014 into Mrs Anderson’s 2011-12 return; and(6) On 23 January 2017 into Mr Anderson’s 2014-15 self-assessment tax return.[11]On 30 January 2014, Mr Anderson filed his 2012-13 self-assessment tax return with no specific capital gains declared. However, (as noted at paragraph 9, above) it stated in the white space in that return that capital gains had been received but had not been finalised. In a letter of 1 February 2014 to HMRC, Mr Anderson explained that there were also capital gains to be taken into account, as indicated on the return. HMRC responded to Mr Anderson’s letter on 21 March 2014, explaining that any CGT liability should be notified in the tax return.[12]On 23 March 2014, Mr Anderson provided, for the first time, a schedule of figures for capital gains relating to the disposal of the practices in previous years. A letter, also attached to that email explained that Mr Anderson had not realised that CGT computations had not been submitted until he was completing the online return for 2012-13.[13]HMRC requested further information on the disposals of the veterinary practice in a letter of 6 June 2014. This was followed by further letters from HMRC, dated 9 July 2014, in which Mr and Mrs Anderson were notified that they were suspected of committing tax fraud and that the investigation would be conducted under COP9. The letters also offered a contractual disclosure facility and contained further requests for information concerning any interests in land/property held by Mr Anderson and/or Mrs Anderson. However, the offer of a contractual disclosure facility was rejected by Mr and Mrs Anderson on 8 September 2014.[14]On 16 March 2015, HMRC (Officer McLauchlan) wrote to Mr Anderson in relation to his, and Mrs Anderson tax affairs, to:
“… provide an update on the points covered, agreed and remaining open in relation to HMRC’s original enquiry into your business and personal tax affairs as well as the current Code of Practice 9 investigation.”
[15]The letter noted that there had been an enquiry into VWJ conducted by HMRC Officer Kingston. This had provided Mr and Mrs Anderson with an opportunity to consider their own tax affairs and ensure any irregularities in their personal tax returns were brought to HMRC’s attention. The letter continued:
“During the course of the enquiry, Mr Kingston discovered that you and your wife had failed to return capital gains on your personal Self Assessment tax returns for 2009/10, 2010/11, 2011/12 and 2012/13. The gains arose from the sale of the four veterinary practices to VWJ Ltd.”
[16]Further searches were subsequently undertaken by HMRC which, as a result, became aware of properties beneficially owned by Mr and Mrs Anderson. These included a house in multiple occupation (“HMO”) and evidence of established letting activity in addition to planning applications by Mr Anderson.[17]On 29 June 2015, HMRC wrote to Mr and Mrs Anderson requesting information on the properties that they held. HMRC wrote again to Mr and Mrs Anderson on 3 August 2015. That letter, which included a schedule recording the annual declaration of rental income received by Mrs Anderson but not Mr Anderson, explained that HMRC held information on property transactions undertaken by Mr and Mrs Anderson “from the late 1980s up to 2014-15” and requested more information as to which of the properties the income received by Mrs Anderson related to.[18]On 3 February 2017, HMRC (Officer McLauchlan) issued ‘Decision Letters’ to Mr Anderson and Mrs Anderson. These letters concerned, inter alia, the CGT on the sale of the practices to VWJ for both Mr and Mrs Anderson and for income tax on rental property income for Mr Anderson only.[19]The Decision Letter issued to Mr Anderson noted that he had given his Antigua address for communication with HMRC and that accordingly:
“… in the absence of any other authorised address, this is the address notified to HMRC for delivery and legal service of HMRC documents.”
[20]The letter also noted that Mr Anderson had withdrawn his authority for HMRC to communicate by email in a letter of 11 November 2014.[21]Both Decision Letters, ie those issued to Mr Anderson and to Mrs Anderson, referred to the sale of the veterinary practices to VWJ and that this had been disclosed on an attachment to an email from Mr Anderson dated 23 March 2014. The Decision Letters stated that the “figures for Capital Gains will be split 50/50” between Mr Anderson and Mrs Anderson. The capital gains referred to in those letters are as set out in the table below: Practice Disposal Date Tax Year Capital Gain Bromley North 2 March 2010 2009-10 £612,775 Orpington 21 October 2010 2010-11 £2,011,000 Biggin Hill 7 April 2011 2011-12 £474,370 Bromley South 7 April 2012 Although the date of the disposal of the practice was 7 April 2012, the decision letter erroneously refers to 7 April 2011 2012-13 £726,175[22]Section 7 of the Decision Letter issued to Mr Anderson concerned UK rental properties, it stated:
“7. … I have established that requests were made to you and Mrs Anderson for information in relation to your ownership of property, both within and outside of the United Kingdom. I also explained the reasons why the information was required. 7.1. Properties held 7.2. Rental income a. Following your and Mrs Anderson’s failure to provide a schedule or list of the properties in which you hold or held an ultimate beneficial interest (for a period specified) HMRC has undertaken further work to establish; i. what properties are or were held by you ii. which of those properties had been registered with HM Land Registry iii. which of those properties had not been registered with HM Land Registry iv. which properties had been transferred or sold by you, and to whom v. the value of any acquisition or disposal vi. which properties were let or rented out by you, either in whole or as Houses of Multiple Occupancy (HMO’s) vii. the actual rental income, or by default the expected rental income viii. which property or properties have been retained for your own use in the United Kingdom, whether or not held in your name or names? b. Obviously a full reply to my requests relating to the properties owned by you and Mrs Anderson and in relation to the rental income received by you and Mrs Anderson would have precluded the necessity for much of this work, and this will, in due course, be reflected in the level of any penalty which may be due. a. The only information available to HMRC on rental income is that returned by Mrs Anderson. However, other than the number of properties, HMRC has no understanding of precisely what properties have been let, or how much rent relates to each property. b. At least one property is an HMO and there is established letting relating to other properties.”
[23]In an Appendix to Mr Anderson’s Decision Letter it is explained that three properties were beneficially owned by Mr and Mrs Anderson, two in Bromley and one in Orpington which were either connected or near to their veterinary practices. It stated that income from these had not been declared in either of their self-assessment tax returns. In evidence, in answer to a question from the Tribunal, Officer Taylor was clear that the assessments issued to Mr Anderson for income from property concerned undeclared income from properties that had not been identified in the self-assessment tax returns. The income from property which had been discovered by Officer McLauchlan was, Officer Taylor confirmed, in addition to the income from property that had been declared by Mr Anderson in his self-assessment returns for 2001-02, 2004-05 and 2013-14.[24]The individual penalties, of £71,713.16 on Mr Anderson and Mrs Anderson, arising for the failure to declare capital gains were calculated at 38.5% of the lost revenue. As Mr and Mrs Anderson did not disclose the omissions in the returns until after HMRC had opened enquiries the disclosures were prompted. There is a 90% reduction within the band for deliberate and not concealed prompted disclosure. The penalties for undeclared income tax on the income from property totalling £184,786.68 (on Mr Anderson only) for 1996-97 to 2007-08 (inclusive) were calculated at 65% of the lost revenue (which included a 20% reduction for co-operation, 15% for seriousness and no reduction for disclosure). The penalties for 2008-09 to 2014-15 (inclusive) were calculated at 63% of lost revenue as prompted, with a 20% reduction for helping.[25]On 28 and 29 March 2017, HMRC Officer Flint issued Mr and Mrs Anderson with discovery (tax) and penalty assessments under ss 29 and 100 TMA and schedule 24 FA 2007. These included a penalty imposed on Mr Anderson, under schedule 24 FA 2007, for a capital gain omitted from his 2014-15 self-assessment tax return in relation to a disposal of property to his children. However, before the hearing of the present appeals HMRC withdrew the closure notice concerned (see paragraph 34(2), below) and, insofar as it is necessary to do so, we discharge that penalty.[26]These assessments were sent to Mr and Mrs Anderson’s address in Antigua, the address stated on their self-assessment tax return.

Appeal to HMRC

[27]Appeal to HMRC On 12 October 2017, Mr Anderson wrote to HMRC stating that he wished to “reaffirm” that his and Mrs Anderson’s self-assessment tax returns were “correct” and that they wished to appeal against:
“… all assessments made and penalties charged for 1996/1997 on.”
[28]In the absence of any grounds of appeal in his letter, HMRC wrote to Mr Anderson on 31 October 2017 to explain that it was necessary for him to provide reasons why he believed the returns were correct. The letter also explained that an appeal had to be made within 30 days from the date of the assessments (which were issued on 28 and 29 March 2017) and, as such the appeal was late.[29]On 10 December 2017, Mr Anderson wrote again to HMRC. With regard to the capital gain on the sale to VWJ, Mr Anderson stated (wrongly) that he had reported the capital gains in each of the four years the practice was incorporated. He also stated:
“It is simply incorrect of HMRC to claim that I have received any additional rental income to that already reported each year by my wife.”
[30]HMRC (Officer Taylor) responded to Mr Anderson’s letter on 23 January 2018. HMRC’s letter explained that Mr Anderson had not provided any grounds of appeal and that it was late. It also noted that Mr Anderson had not provided any information in relation to any rental income he had received. In the absence of any response to that letter, HMRC wrote to Mr Anderson on 18 March 2018. A copy of HMRC’s letter of 23 January 2018 was enclosed, and a response was requested from Mr Anderson by 25 May 2018.[31]On 18 March 2018, Mr Anderson replied to HMRC’s letter. He explained that he had already appealed against the assessment made on 28 March 2017. With regard to the income from property he wrote:
“Again we contend that no tax is due. We are fortunate to have received substantial property income over this period but each year property income and expenditure has been accurately returned by LA [Mrs Anderson]. You will no doubt have noticed that actual rental receipts far exceeds Mr McLauchlan’s estimates.”
[32]Despite the lack of any formal grounds or any explanation for the appeal having been made late, HMRC accepted the appeal out of time and, in a letter of 13 July 2018, set out their view of the matter. This was that, in the absence of evidence the assessments would stand. HMRC’s letter of 13 July 2018 also set out Mr and Mrs Anderson’s appeal rights, explaining that they could appeal to the Tribunal “within 30 days” of the date shown on that letter, ie by 12 August 2018.[33]Mr Anderson, however, did not respond. Therefore, in a letter of 12 October 2018, HMRC (Officer Taylor) wrote to Mr and Mrs Anderson at both their Antigua and French addresses stating:
“I have not received a reply to my letter of 13 July 2018. As a result, your appeal is now treated as being settled by agreement under section 54(1) Taxes Management Act 1970. I will now take action to collect the tax due as outlined in my letter of 13 July 2018.”
[34]On 21 February 2019, HMRC issued the following closure notices:(1) to Mr Anderson, under s 28A(1B) and(2) TMA for 2011-12, in respect of the CGT payable on his share of the capital gains on the sale of the Practice increasing the tax due by £41,777; (2) to Mr Anderson, under s 28A(1B) and (2) TMA, for 2014-15 in relation to taxable income from property and a failure to declare a capital gain from the disposal of real property to his children increasing the tax due by £226,610.18. HMRC withdrew the amendment to the closure notice in relation to the capital gains on the disposal of property to Mr Anderson’s children prior to the hearing and this element of the closure notice (together with the associated penalty) was not before the Tribunal;(3) to Mrs Anderson, under s 28A (1B) and (2) TMA, for 2011-12 in relation to the failure to declare a share of the capital gain on the sale of the Practice from the Appellant’s partnership to VWJ Ltd on 7 April 2012 [HB/674] increasing the tax due by £22,658.50; and(4) to Anderson Vets under s 28B(1) and (2) TMA in relation to the Partnership Tax Return for 2011-12. The notice was to amend the partnership return in relation to the failure to declare the sale of the capital gain on a sale of a veterinary practice from the Appellant’s partnership, Anderson Vets, to VWJ Ltd on 7 April 2012.[35]HMRC wrote to Mr and Mrs Anderson on 17 May 2019. The letter explained that the tax and penalty assessments had been sent to Mr and Mrs Anderson at both their Antigua and French addresses as had been the case with the four previous letters from HMRC for which there had been no response. The letter also explained that the closure notices were also sent to both Mr and Mrs Anderson.[36]On 31 May 2019, Mr Anderson wrote to HMRC in the following terms:
“Your letter dated 17 May [2019] was received at today’s date. As you are aware the French address is a temporary one before I return to the West Indies, I shall appeal your decision to treat our appeals as settled and make [an] application to the Tribunal Service as suggested. I am dismayed at the incompetence of HMRC and would be grateful please if you could supply the name and address of the Director on whose authority you act.”

Appeal to Tribunal

[37]On 18 June 2019, Mr and Mrs Anderson appealed to the Tribunal. However, as the email from the Tribunal, dated 26 June 2019, acknowledging receipt of the appeal and explaining the independence of the Tribunal noted, “from the papers provided it is not clear what matters you are appealing to the Tribunal.”[38]Given their appeals were against assessments and penalties issued on 28 and 29 March 2017, Mr and Mrs Anderson’s appeals to the Tribunal were late, ie outside the statutory time limits for appeals. Therefore, applications were made for them to be admitted out of time. HMRC opposed those applications which were listed for a video hearing on 15 March 2021 before Judge Sukul.[39]In her decision following that hearing, Judge Sukul noted that: She continued, at [24]:
“13. Mr Anderson’s evidence during the hearing, which I accept, set out his experience, the background circumstances of the appeal and details of the postal issues which hampered the Appellants receipt of correspondence in Antigua. Mr and Mrs Anderson received some correspondence at their address in France when they were there during the summer months. They had made some efforts towards alternative arrangements with use of their children’s addresses for a limited period and then giving permission for HMRC to correspond with them via email. The email permission was revoked when HMRC were unable to provide documentation in the requested Word or PDF format to overcome Mr Anderson’s difficulty reading on screen. The Appellants agreed from 16 May 2019 they would revert to the address in France to avoid further difficulty. 14. Mr Anderson submitted they are honest and have no need to be anything but open. HMRC were aware that correspondence was not being received and they were sending letters to France which was not their actual address for service. Mr Anderson said that he had informed HMRC that letters would need to be sent to Antigua by courier.” “I accept Mr Anderson’s evidence that he made the appeals when he understood that he needed to do so and the reasons for the delay were because of difficulties receiving HMRC correspondence and because of the Appellants’ misunderstanding of the appeals process. I do not consider it to be objectively unreasonable for the Appellants, in their situation, to misunderstand the appeal process when they were not in receipt of all HMRC correspondence and I accept Mr Anderson’s contention that the Appellants cannot respond to that which they have not received.”
[40]Having taken into account the length of the delay, the reasons for it (the communications issues) and overall circumstances (ie applying the guidance of the Upper Tribunal in Martland v HMRC [2018] UKUT 178 (TCC) at [44]), Judge Sukul granted permission for the appeals to proceed even though they “were made out of time and were significantly late”.[41]HMRC sought permission to appeal to the Upper Tribunal against Judge Sukul’s decision to admit the appeals. Although permission was granted by Judge Richards (as he then was) on 7 January 2022, HMRC did not take any further action to pursue that appeal. In July 2022 they withdrew their appeal to the Upper Tribunal and agreed with Mr and Mrs Anderson that the appeal would proceed in the First-tier Tribunal and that Mr and Mrs Anderson would provide their grounds of appeal.[42]On 21 September 2022, Mr Anderson, on behalf of himself and Mrs Anderson, in what was described as “The Appellants Statement of the Case” (which referred to the CGT, income tax and penalties in dispute), made an application for a direction that HMRC file and serve a statement of case “within a specified period.” The Tribunal (Judge Sukul) issued case management directions on 7 October 2022 under which HMRC were directed to provide a statement of case by 7 November 2022.[43]On 18 October 2022, HMRC made an application to the Tribunal for a direction that Mr and Mrs Anderson “particularise their grounds of appeal in reasonable detail.” The application referred to the Appellants Statement of the Case, noting that this did:
“… not explicitly, or otherwise, state the decisions that are being appealed against, and do not provide sufficient, or any, detail of the grounds of appeal. In particular there is an absence of information about why the Appellants say that the 2017 assessments and 2019 closure notices are wrong. The Appellants do not explain the grounds for their appeal with reference to any substantive legal and/or factual references and therefore the Respondents cannot possibly understand the reason for the dispute. As such the Respondents cannot properly respond to those grounds or prepare properly for any eventual hearing.”
[44]Having been invited by the Tribunal to do so, on 24 October 2022 Mr Anderson responded to HMRC’s application by email stating:
“I have no wish to waste the Tribunals time or add to further delay but we do not think the Respondent’s application dated 18 October is necessary. Firstly, it is a minor point, but I have not agreed to provide grounds of appeal for either the 2017 assessments or the 2019 decisions before the hearing. Our statement of the case clearly lists the four specific income or capital gains taxes that are in dispute. The purpose of the hearing will be for each party to bring the facts of the matter before the Tribunal. We also intend to demonstrate that the Respondents have acted unreasonably.”
[45]The Tribunal (Judge Popplewell), having considered the Appellants’ Statement of the Case, HMRC’s application and Mr Anderson’s response, granted HMRC’s application and directed Mr and Mrs Anderson to set out, by 6 December 2022, in sufficient detail to enable an objective reader to understand it, the basis on which they say HMRC are not entitled to the tax which they have assessed, together with details of the unreasonable behaviour which they allege has been shown towards them by HMRC.[46]This was notified to the parties in a letter from the Tribunal of 15 November 2022. This letter explained that

Judge Popplewell had instructed the Tribunal to write to them in the following terms:

“I have considered HMRC’s application in light of the appellant’s statement of case of 21 September 2022. It is my view that HMRC’s application has merit, and I allow it. Although the caselaw cited in that application is not binding on me, I agree with it. It is incumbent on the appellants to set out, in sufficient detail, the basis on which they say that they are not liable to the tax to which HMRC have assessed them, … It is not sufficient for the appellants to sit and claim, as they have in their email of 24 October 2022, that by listing the four specific income and capital gains taxes that are in dispute, and by bringing the facts before the tribunal, they have provided that detail. It is not at all clear to me, and it would not be apparent to the trial judge, on what basis the appellants are resisting HMRC's claim for those taxes. This needs to be set out in sufficient detail to enable HMRC to understand the appellants’ “defence”
. Furthermore, if they are suggesting that HMRC have acted unreasonably, they should particularise the unreasonable behaviour so as to give HMRC a chance to consider and, if required, refute that allegation. And this is the case whether, as Mr Anderson asserts, he did not agree to provide grounds of appeal for the 2017 assessments or the 2019 decisions.”[47]In an email in response, dated 15 November 2022, Mr Anderson stated, in regard to the CGT and income from property, that no CGT was due as the sales took place “when the non-resident CGT exemption of commercial property was still in place and that the assessment of income from property was a:
“… discovery assessment so the “onus is on HMRC to demonstrate their case. For our part we can demonstrate the accuracy of our figures.”
[48]However, despite stating that they could demonstrate the accuracy of their figures, there was nothing in Mr Anderson’s email, or indeed subsequently until and including the hearing, in which they did so.[49]On 28 November 2022, HMRC made a further application for a direction that Mr and Mrs Anderson particularise their grounds of appeal in reasonable detail. That application also made it clear that the only matters in dispute were the discovery assessments on both Mr and Mrs Anderson for CGT on the sale of the veterinary practice and on Mr Anderson for income from property, ie the issues with which the present appeals are concerned.[50]Following further correspondence by the parties with the Tribunal during 2023, and a further application by HMRC, essentially renewing the previous application, a case management video hearing before Judge Sukul was listed on 30 April 2024. This resulted in case management directions being issued by the Tribunal (Judge Sukul) on 9 May 2024. Direction 2 of those directions, headed “Amended Grounds of Appeal” stated:
“2. Not later than 20 June 2024 the Appellant shall send to HMRC and the Tribunal their Amended Grounds of Appeal, setting out, in sufficient detail, the basis on which they say that they are not liable to the tax to which HMRC have assessed them.”
(emphasis as stated in the Directions)[51]Mr and Mrs Anderson did not provide the amended grounds of appeal within the time stated in the Directions or at all.[52]On 4 July 2024, HMRC made an application to the Tribunal for an order (the “Unless Order”) that unless Mr and Mrs Anderson provided particularised Grounds of Appeal that set out the basis on which they say they are not liable to the tax and penalties to which they had been assessed within 14 days, their appeals would be automatically struck out.[53]Mr Anderson responded on 5 July 2024 stating that he was not legally represented and did not understand “exactly what” was required of him but that he intended to “remedy this by engaging a specialist tax Barrister” to respond to HMRC. He concluded by stating that it seemed unfair for the appeals to be struck out. Following further correspondence from the parties, a half-day video hearing was listed on 15 January 2025 before Judge Sukul to determine the Unless Order application. As in the present case Mr and Mrs Anderson appeared in-person and HMRC were represented by counsel (Max Schofield). No oral evidence was called by HMRC in that application.[54]Following that hearing, directions for the further progress of the appeals were agreed by the parties. Those directions were endorsed and issued by the Tribunal (Judge Sukul) on 15 April 2025. It is recorded in those directions that Mr and Mrs Anderson accepted the CGT assessments and also accepted that they were careless in not including these in their self-assessment tax returns. However, Mr and Mrs Anderson did not accept that they had any intention not to report the CGT such that the behaviour was deliberate.[55]Under those endorsed directions it was ordered that:(1) On or before 21 days from the date of this direction [ie by 6 May 2025], Mr Anderson must send to both the Tribunal and HMRC, by way of email, a document standing as his grounds of appeal in relation to the property rental income assessments and penalties, setting out in sufficient detail the basis on which he says that he is not liable to the sums which HMRC have assessed; and(2) If Mr Anderson fails to comply with order (1) above, the Tribunal may on its own initiative or by application strike out his appeal in relation to the property rental income assessments and penalties.[56]On 22 April 2025, Mr Anderson sent an email to the Tribunal (which was copied to HMRC). Attached to it were spreadsheets containing a list of dates, names and amounts which he described as details of gross rents received in 2010, 2011, 2012 and 2013.[57]By letter of 27 May 2025, the Tribunal requested that HMRC respond to Mr Anderson’s email. HMRC’s response of 10 June 2025 stated that it was not clear to them from the spreadsheets provided by Mr Anderson how much rental income was received and by whom it was declared for each property.[58]The letter explained that HMRC had requested further details from Mr Anderson who had responded that he was unable to “provide much in the way of further details” as it concerns “a time of over ten years ago and this data does not affect our tax liability.” The letter also noted that HMRC considered Mr and Mrs Anderson’s pleaded case in relation to the property income to be “inadequate”, especially as this was an issue in which Mr Anderson bore the burden of proof. However, despite this, HMRC considered it was appropriate to progress the matter (without prejudice to any future strike out application) and requested that the Tribunal issue further directions to replace those of 9 May 2024 which had become obsolete.[59]On 8 July 2025, the Tribunal (Judge Sukul) issued new case management directions to progress the appeals to a hearing. Under those directions HMRC were to file and serve a statement of case by 5 September 2025 (direction 1). The directions also stated that where a party intended to rely on witness evidence that party “may” provide a witness statement if they wished to do so by no later than 3 October 2025 (directions 4 and 5).[60]HMRC provided a statement of case on 5 September 2025 and filed the witness statement of Officer Richard Taylor. Mr and Mrs Anderson did not file any witness statements.[61]The substantive appeals were subsequently listed for hearing between 28 and 30 July 2026.

Law

[62]Law Tax Assessments Under ss 8 and 9 TMA an individual is required to file a personal tax return with a self-assessment of the amounts to which they are charged to income tax and CGT for that year of assessment with a declaration that it is correct to the best of their knowledge.[63]Section 29 TMA, as in force at the date of the assessments in this case, provided: 29. Assessment where loss of tax discovered(1) If an officer of the Board or the Board discover, as regards any person (the taxpayer) and a year of assessment— (a) that any income which ought to have been assessed to income tax, or chargeable gains which ought to have been assessed to capital gains tax, have not been assessed, or (b) that an assessment to tax is or has become insufficient, or (c) that any relief which has been given is or has become excessive, the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax.(2) Where— (a) the taxpayer has made and delivered a return under section 8 or 8A of this Act in respect of the relevant year of assessment, and (b) the situation mentioned in subsection (1) above is attributable to an error or mistake in the return as to the basis on which his liability ought to have been computed, the taxpayer shall not be assessed under that subsection in respect of the year of assessment there mentioned if the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.(3) Where the taxpayer has made and delivered a return under section 8 or 8A of this Act in respect of the relevant year of assessment, he shall not be assessed under subsection (1) above— (a) in respect of the year of assessment mentioned in that subsection; and … (b) ...in the same capacity as that in which he made and delivered the return, unless one of the two conditions mentioned below is fulfilled.(4) The first condition is that the situation mentioned in subsection (1) above was brought about carelessly or deliberately by the taxpayer or a person acting on his behalf. … (8) An objection to the making of an assessment under this section on the ground that neither of the two conditions mentioned above is fulfilled shall not be made otherwise than on an appeal against the assessment. (9) Any reference in this section to the relevant year of assessment is a reference to— (a) in the case of the situation mentioned in paragraph (a) or (b) of subsection (1) above, the year of assessment mentioned in that subsection; and (b) in the case of the situation mentioned in paragraph (c) of that subsection, the year of assessment in respect of which the claim was made.[64]The standard time limit in which HMRC may issue an assessment is four years after the end of the year of the assessment to which it relates (see s 34 TMA). However, extended time limits are found in s 36 TMA as follows: 36. Loss of tax brought about carelessly or deliberately etc (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).[65]Insofar as applicable s 50 TMA provides 50. Procedure … (6) if, on an appeal notified to the tribunal, the tribunal decides—(a) that, ..., the appellant is overcharged by a self-assessment;(b) that, ..., any amounts contained in a partnership statement are excessive; or(c) that the appellant is overcharged by an assessment other than a self-assessment, the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good. …[66]Section 118 TMA provides: 118. Interpretation … (5) For the purposes of this Act a loss of tax or a situation is brought about carelessly by a person if the person fails to take reasonable care to avoid bringing about that loss or situation. … (7) In this Act references to a loss of tax or a situation brought about deliberately by a person include a loss of tax or a situation that arises as a result of a deliberate inaccuracy in a document given to Her Majesty’s Revenue and Customs by or on behalf of that person[67]There is a right of appeal against any conclusion, statement or amendment made by a closure notice or any assessment to tax which is not a self-assessment (see s 31 TMA).[68]It is for HMRC to establish that the relevant conditions for the issue of a discovery assessment, under s 29 TMA, and time limits, under ss 34 or 36 TMA, have been met (see Burgess & Brimheath Developments Ltd v HMRC [2015] UKUT 578 (TCC)). If HMRC establishes that a discovery assessment is valid and in time, s 50(6) TMA then applies, as it does for in-date assessments, with the effect that unless the taxpayer can establish that the is wrong, it “shall stand good” (see eg Johnson v Scott (Inspector of Taxes) [1978] STC 48 at 53).[69]The reason why the burden is on the taxpayer seeking to dislodge an assessment was explained by Walton J (who was subsequently upheld by the Court of Appeal) in Nicholson v Morris(Inspector of Taxes) [1976] STC 269 at 280, who, in a case where the taxpayer elected not to give evidence, said:
“… Even supposing that I were myself to think that the amounts were wrong—and, as I have freely conceded, and as counsel for the Crown has freely conceded, they probably are wrong—what on earth could I or anybody else at this stage, in the total absence of evidence, substitute for them? The answer is that it is a complete and utter impossibility; and that is why, of course, the Taxes Management Act 1970 throws on the taxpayer the onus of showing that the assessments are wrong. It is the taxpayer who knows and the taxpayer who is in a position (or, if not in a position, who certainly should be in a position) to provide the right answer, and chapter and verse for the right answer, and it is idle for any taxpayer to say to the Revenue, ‘Hidden somewhere in your vaults are the right answers: go thou and dig them out of the vaults.’ That is not a duty of the Revenue. If it were, it would be a very onerous, very costly and very expensive operation, the costs of which would of course fall entirely on the taxpayers as a body. It is the duty of every individual taxpayer to make his own return and, if challenged, to support the return he has made, or, if that return cannot be supported, to come completely clean; and if he gives no evidence whatsoever he cannot be surprised if he is finally lumbered with more than he has in fact received. It is his own fault that he is so lumbered.”

Penalties

[70]Before 1 April 2008 s 95 TMA provided: 95. Incorrect return or accounts for income tax or capital gains tax(1) Where a person fraudulently or negligently— (a) delivers any incorrect return of a kind mentioned in section 8 or 8A of this Act (or either of those sections as extended by section 12 of this Act..., or (b) makes any incorrect return, statement, or declaration in connection with any claim for any allowance, deduction or relief in respect of income tax or capital gains tax, or (c) submits to an inspector or the Board or any Commissioners any incorrect accounts in connection with the ascertainment of his liability to income tax or capital gains tax, he shall be liable to a penalty not exceeding the amount of the difference specified in subsection (2) below.(2) The difference is that between— (a) the amount of income tax and capital gains tax payable for the relevant years of assessment by the said person (including any amount of income tax deducted at source and not repayable), and (b) the amount which would have been the amount so payable if the return, statement, declaration or accounts as made or submitted by him had been correct.(3) The relevant years of assessment for the purposes of this section are, in relation to anything delivered, made or submitted in any year of assessment, that, the next following, and any preceding year of assessment[71]These penalties could be subject to abatement for disclosure, co-operation, and the seriousness of the offences (see HMRC’s Manuals EM6060 and EM6065).[72]Section 100 TMA (at the time) provided for an officer to make a determination imposing a penalty at such amount as in his opinion is correct or appropriate. The time limit for doing so in accordance with s 103 TMA was:(a) at any time within six years after the date on which the penalty was incurred, or(b) at any later time within three years after the final determination of the amount of tax by reference to which the amount of the penalty is to be ascertained.”[73]Section 100B(2)(b) TMA provides that the Tribunal may:(i) if it appears that no penalty has been incurred, set the determination aside,(ii) if the amount determined appears to be appropriate, confirm the determination,(iii) if the amount determined appears to be excessive, reduce it to such other amount (including nil) as it considers appropriate, or(iv) if the amount determined appears to be insufficient, increase it to such amount not exceeding the permitted maximum as it considers appropriate.[74]From 1 April 2008, s 97 and schedule 24 FA 2007 provides for penalties for inaccuracies in certain documents (including a personal return under s 8 TMA) which amount to, or lead to, an understatement to a liability to tax.[75]Paragraph 3 of Schedule 24 FA 2007 provides:(1) For the purposes of a penalty under paragraph 1, inaccuracy in a document given by P to HMRC is— (a) “careless” if the inaccuracy is due to failure by P to take reasonable care, (b) “deliberate but not concealed” if the inaccuracy is deliberate on P’s part but P does not make arrangements to conceal it, and (c) “deliberate and concealed” if the inaccuracy is deliberate on P’s part and P makes arrangements to conceal it (for example, by submitting false evidence in support of an inaccurate figure).(2) An inaccuracy in a document given by P to HMRC, which was neither careless nor deliberate on P’s part when the document was given, is to be treated as careless if P— (a) discovered the inaccuracy at some later time, and (b) did not take reasonable steps to inform HMRC.[76]Under paragraph 4 of schedule 24 FA 2007, the standard amount for penalties payable is 30% of potential lost revenue for careless action, and 70% of potential lost revenue for deliberate (but not concealed) action.[77]Penalties must be reduced under paragraphs 9 and 10 of Schedule 24 FA 2007 for disclosing the matter to HMRC based on the quality of the disclosure (ie by telling HMRC; by giving HMRC reasonable help in quantifying the inaccuracy; and giving access to records to ensure the inaccuracy is corrected). The reduction depends on whether the disclosure was prompted or unprompted – ie being made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the inaccuracy.[78]Under paragraph 13 of schedule 24 FA 2007, penalty assessments must be made before the end of 12 months from the end of the appeal period for the decision correcting the inaccuracy, ie the period during which an appeal could be brough or where an appeal has been brought but not yet been determined.[79]On appeal, the Tribunal may, under paragraph 17 of schedule 24 FA 2007, affirm or cancel HMRC’s decision to assess for penalties, or affirm or substitute their decision on the amount of a penalty (for another amount that HMRC would have had the power to make).[80]It is not disputed that it is for HMRC to establish that a taxpayer is liable to a penalty, eg that his or her conduct was deliberate.

Delivery of Documents

[81]Delivery of Documents Insofar as applicable to the present case, s 115 TMA provides: 115. Delivery and service of documents(1) A notice or form which is to be served under the Taxes Acts on a person may be either delivered to him or left at his usual or last known place of residence(2) Any notice or other document to be given, sent, served or delivered under the Taxes Acts may be served by post, and, if to be given, sent, served or delivered to or on any person [by HMRC] may also be served addressed to that person (a) at his usual or last known place of residence, or his place of business or employment…

Jurisdiction of Tribunal

[82]As explained during the hearing, as it was created by statute (the Tribunals Courts and Enforcement Act 2007), the Tribunal’s jurisdiction is defined and limited by legislation and does not extend to the power to override a statute or supervise the conduct of HMRC (see HMRC v Hok Ltd [2012] UKUT 363 (TC) at [56].

Discussion and Conclusion

[83]Discussion and Conclusion The issues before the Tribunal in these appeals are:(1) Whether HMRC have established the s 29 TMA discovery assessments are valid and in time; and if so,(2) Whether Mr Anderson is liable, under the assessments, for income tax on property rental income (ie has he adduced sufficient evidence to displace the assessments); and(3) Whether, (a) both Mr Anderson and Mrs Anderson are liable for penalties for “deliberate”, or as they accept “careless”, behaviour for the purposes of failing to declare CGT on the disposal of the veterinary practices, and (b) Mr Anderson is liable for penalties for fraudulently filing incorrect self-assessment tax returns between 1996-97 and 2007-08 and deliberately filing inaccurate returns between 2008-09 and 2014-15.[84]Although Mr Anderson in his submissions and in his cross-examination of Officer Taylor emphasised what he contended was the unreasonable conduct of HMRC – especially in relation to their failure to ensure correspondence was sent to the correct address – the conduct of HMRC is not something we can consider as it is not, as explained above (at paragraph 81), within our jurisdiction.[85]However, even if HMRC’s conduct was within the Tribunal’s jurisdiction, difficulties with communication is not relevant to the issues in this appeal. This is in contrast to the application for permission to appeal out of time where it was necessary to consider these difficulties as they were stated to be the reason for the delay in appealing to the Tribunal. In that hearing, the communications issues were very much taken into account by Judge Sukul when granting permission for these appeals to proceed out of time (see paragraph 38, above).[86]We should also make clear, for the avoidance of doubt, that we consider the assessments and penalty assessments to have been properly served on Mr and Mrs Anderson, in accordance with s 115 TMA, as these were posted to the address, as stated in their self-assessment tax returns, in Antigua.[87]We now turn to the issues:

Discovery Assessments

[88]Discovery Assessments Both Mr and Mrs Anderson failed to declare the capital gains on the disposal of their veterinary practice to VWJ in their self-assessment tax returns, an omission “discovered” by Officer Kingston (see paragraph 15, above). In addition, as Officer McLauchlan discovered (see paragraph 23, above) Mr Anderson failed to declare rental income from two properties in Bromley and one in Orpington. As such, there was a discovery of an insufficiency of CGT and income tax which ought to have been assessed and, as self-assessment tax returns had been filed, HMRC were entitled to issue discovery assessments provided the condition in s 29(4) TMA is fulfilled, ie that the insufficiency of tax was brought about carelessly or deliberately by Mr and Mrs Anderson.[89]In relation to the CGT assessments, Mr Carey for HMRC contends, and we accept, as do Mr and Mrs Anderson themselves (see paragraph 54, above), that the condition in s 29(4) TMA has been met in that the insufficiency of CGT was brought carelessly or deliberately by their filing self-assessment tax returns for 2009-10, 2010-11, 2011-12 and 2012-13 which, because of the omission of any capital gains, were inaccurate. However, Mr and Mrs Anderson say that the omission of the capital gains was careless whereas HMRC contend it was deliberate.[90]There is a general obligation on taxpayers to be aware of their tax obligations (see Townend v HMRC [2016] UKFTT 276 (TC) at [147]). Given that Mr and Mrs Anderson were partners in a substantial veterinary practice and made the decision to sell the practice to VWJ, a company they wholly owned, they would have known of the sales and sums received. In such circumstances they should, and we consider it more likely than not that they did, know that there would be capital gains arising as a result of the sale and that these should have been included in their self-assessment returns for 2009-10, 2010-11, 2011-12 and 2012-13. As they did not declare any capital gains in their self-assessment returns for those years, we find that Mr and Mrs Anderson failure to do so was deliberate.[91]In relation to the income tax assessments (on Mr Anderson only), we consider that the insufficiency of income tax arose as a result of income from the properties concerned being deliberately omitted by Mr Anderson from his self-assessment returns. This is because the properties concerned were either near to or connected to the veterinary practices of which he was a partner, he had previously declared rental income and therefore must have known that such income was chargeable to income tax but did not declare it in his self-assessment returns.[92]Having concluded that the inaccuracy in their self-assessment returns was brought about deliberately by Mr and Mrs Anderson, it follows that the extended time limit in s 36(1A) applies and that the discovery assessments, which were valid, were made in time.

Quantum of Assessment

[93]Quantum of Assessment The quantum of the CGT assessment is not disputed by Mr and Mrs Anderson (see paragraph 54, above).[94]With regard to the assessment on Mr Anderson for income from property, despite the statement in his email of 15 November 2022 to HMRC that he could demonstrate the accuracy of the figures (see paragraph 47, above), he did not adduce any evidence to do so. In the absence of any such evidence we find ourselves very much in the same position as the Special Commissioner (Dr John Avery Jones) in M E Walsh v HMRC [2008] UKSC SPC676, where he said, at [7]:
“The Appellant has offered me no evidence from which I could conclude that the Appellant was overcharged by the amended self-assessment and accordingly it must stand good.”
[95]Although the present case concerns discovery assessments under s 29 TMA rather than amendments to self-assessments under s 28A TMA, the same applies. Without evidence to displace the assessment, for the reasons explained by Walton J (see paragraph 69, above), the assessments stand good. Therefore, Mr Anderson’s appeal against the assessments for income from property cannot succeed.

Penalties

[96]Penalties HMRC contend that Mr and Mrs Anderson are each liable to penalties of £71,713.16 under schedule 24 FA 2007 because they deliberately failed to declare capital gains in their 2009-10, 2010-11, 2011-12, and 2012-13 self-assessment tax returns. HMRC also contend that Mr Anderson is liable to penalties of £184,786.68, under s 95 TMA and schedule 24 FA 2007, for fraudulently failing to declare income from property in his self-assessment returns for 1996-97 to 2007-08 (inclusive) and deliberately failing to declare such income in his returns for 2008-09 to 2014-15 (inclusive) respectively.[97]Those penalties include the reductions given by HMRC for the quality of the disclosure and co-operation etc (see paragraph 24, above).[98]Having found the omission of capital gains in their self-assessment returns to be deliberate on the part of Mr and Mrs Anderson the only possible conclusion we can reach is that the penalties were properly imposed by HMRC.[99]We also consider that, for the reasons in paragraph 91 above, Mr Anderson deliberately did not declare income from property on his self-assessment returns for 2008-09 to 2014-15 and is therefore liable to penalties under schedule 24 FA 2007. In addition, by knowing he should have declared income from property in his 1996-97 to 2007-08 returns but not doing so, we find that Mr Anderson fraudulently filed those returns and is therefore liable to a penalty under s 95 TMA.[100]In the absence of any submissions or evidence, or indeed any challenge, by Mr Anderson in relation to quantum, the level of his and Mrs Anderson’s co-operation with HMRC or the quality of their disclosure, we accept Mr Carey’s submission that, having regard to all the circumstances of the case, the level of penalties is appropriate.

Conclusion

[101]Conclusion For the reasons above, we dismiss the appeals of Mr Anderson and Mrs Anderson and confirm the assessments and penalties in the amounts set out in the tables in the Appendix.

Right to apply for permission to appeal

[102]Right to apply for permission to appeal This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 20 August 2026