“In this Act references to a loss of tax or a situation brought about deliberately by a person includes 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.”
“ 76. [Dr Danapal’s representative] says that there was no "suggestion of fraudulent or negligent conduct on the part of the appellant during the process of investigation". He says that Dr Danapal relied wholly upon his accountants to prepare and submit his returns; they were qualified to do so and such reliance was not negligent (or careless) let alone a fraudulent (or deliberate) act by Dr Danapal intending to mis-state his taxable income. 77. Dr Danapal’s evidence to us was that he had at the time of these returns a full-time job as an A&E consultant which, with his private practice, gave him no time to scrutinise his tax returns or to learn anything about tax. He knew nothing about tax other than that he had paid on his income; he left everything to his accountants and followed their advice. His private practice manager handled the maintenance of the accounting records. 78. Overall we believed Dr Danapal. We think it unlikely that he knew how the figures in his returns were calculated. We accept that he felt justified in leaving everything to his accountants, but that leaves the question as to whether so doing was careless. 79. The accountants used were qualified and their letters indicate an understanding of the issues. Whilst there was no evidence that there was some obvious inaccuracy or inconsistency in his returns, giving them no real scrutiny before signing them could be regarded as carelessness. 80. But section 29 (4) speaks not only of careless or deliberate behaviour on the part of the taxpayer, it also speaks of such behaviour on the part of the person acting on his behalf. It seems to us that the errors in the returns were redolent of at least careless behaviour on the part of Mr Danapal’s accountants. 81. On that basis the condition in section 29(4) was satisfied.”
“91. We find that from 2007/8 onwards capital allowances were claimed in respect of equipment which was treated in Dr Danapal’s returns as having been bought by him for£171,000 . We find that Mr Robinson sought evidence of this purchase but the only evidence tendered to him was a loan agreement relating to a purchase of the equipment and made between a bank and Harley Street Healthcare Ltd (the company which in 2012 took over Dr Danapal’s business). 92. Mr Robinson concluded from this that the asset in question was not owned by Dr Danapal but by that company, and accordingly that capital allowances were not available to Dr Danapal in respect of it. 93. We agree that if the assets did not belong to Dr Danapal then capital allowances should not have been claimed in the years from 2007/8 onwards… 94. We accept, although this was not argued by [Dr Danapal’s representative], that it is possible that the loan to the company was part of an arrangement under which Dr Danapal acquired ownership of the assets and incurred the expense of acquiring it. That could have been the case, for example, if the company had acted as Dr Danapal’s agent, if the company had lent the money to Dr Danapal who bought the assets, or if Dr Danapal had acquired the asset from the company after the company had purchased it. However none of the evidence before us provided any suggestion that such possibility was likely. We therefore find that Dr Danapal did not own the asset and did not pay for it. 95. If the purchase of the equipment was made by the company it would not have been reflected in the business bank account or Dr Danapal’s personal bank account. Thus whoever prepared the tax return must have recorded the acquisition knowing that the cost was not incurred by Dr Danapal. On this basis the capital allowance claim made in the 2007/8 tax return is likely to have been made in the knowledge that such relief was not due and therefore with the intention of representing falsely that it was due. On this basis it was made deliberately by Dr Danapal’s then accountants. 96. We are not able to reach a similar conclusion in relation to later years. That is because it seems to us perfectly reasonable that whoever was preparing the tax return for those years made the capital allowance claim by reference to the brought forward pool of expenditure and would not necessarily have known how that brought forward balance arose. 97. Thus we find that there was an insufficiency brought about deliberately by reason of excessive capital allowance relief in 2007/8 but do not so find in relation to later years.”
“102. No evidence was provided to us that this sum was not fee income of the year. We have found that it was agreed by Dr Danapal’s advisors. The omission of such income in 2010/11 indicates that it was likely that further such omissions had occurred in earlier years. The fact that at least part of this income was represented by deposits to Dr Danapal’s personal business bank account indicated that the income had intentionally been kept out of the business of the books of the business and that therefore the insufficiency of assessed tax by reason of its omission had been deliberate. 103. That there was a deliberate under-recording of a number of fee receipts in 2010/11 indicates to us that it is likely that this was a pattern of behaviour and so likely in the absence of evidence to the contrary that it had been pursued in earlier years. Evidence to the contrary could have consisted of the presentation of Dr Danapal’s bank statements for earlier years and a reconciliation of the receipts with his declared turnover, but none such was produced to us. We conclude that the omissions of equivalent income in earlier years was also deliberate. 104. We find that this deliberate omission was the result of the action of either Dr Danapal or his then accountants or both. These were not insubstantial sums; there were several of them; their omission cannot have been simply an oversight or careless. If Dr Danapal gave access to his personal bank accounts to his accountants or declared the fees to them then the insufficiency must have been brought about by them deliberately; if Dr Danapal did not give his accountants access to his personal bank accounts he must have known that he should declare these fees to them. If he did not declare the deposits to his accountants then the insufficiency was brought about deliberately by him. In either case this insufficiency was brought about by Dr Danapal or a person acting on his behalf.”
“106. Section 36 extends the time limit for making an assessment to 20 years where there is a case "involving a loss of tax brought about deliberately”
“(1) The duty is a function of due process, and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties especially the losing party should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know (as was said in Ex parte Dave) whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not. (2) The first of these aspects implies that want of reasons may be a good self-standing ground of appeal. Where because no reasons are given it is impossible to tell whether the judge has gone wrong on the law or the facts, the losing party would be altogether deprived of his chance of an appeal unless the court entertains an appeal based on the lack of reasons itself. (3) The extent of the duty, or rather the reach of what is required to fulfil it, depends on the subject matter. Where there is a straightforward factual dispute whose resolution depends simply on which witness is telling the truth about events which he claims to recall, it is likely to be enough for the judge (having, no doubt, summarised the evidence) to indicate simply that he believes X rather than Y; indeed there may be nothing else to say. But where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, " the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence; but it is not necessarily limited to such cases. (4) This is not to suggest that there is one rule for cases concerning the witnesses truthfulness or recall of events, and another for cases where the issue depends on reasoning or analysis (with experts or otherwise). The rule is the same: the judge must explain why he has reached his decision. The question is always, what is required of the judge to do so; and that will differ from case to case. Transparency should be the watchword.”
“[62] ….it is not open to HMRC to put allegations of dishonesty (or other serious forms of misconduct) to their witnesses, or to invite the FTT to make adverse findings of fact on such a basis, unless the relevant allegations have been pleaded with full particularity and the Appellants have been given a proper opportunity to respond to them. [63] In cases where the burden of proof lies on HMRC to establish fraud or dishonesty, these principles undoubtedly apply in the same way as they would in ordinary civil litigation. Examples include cases where HMRC wished to make assessments to income tax outside normal time limits on the ground (before 1989) of fraud or wilful default unders 36 of the Taxes Management Act 1970 …”
“34. We well understand how the Recorder’s suspicions were aroused. However, in the absence of good reason a Judge ought to be extremely cautious before making conclusive findings of fraud unless the person concerned has at least had the opportunity to give evidence to rebut the allegations. This is a matter of elementary fairness. In Vogon International Ltd v the Serious Fraud Office[2004] EWCA Civ 104 at [29] May LJ (with whom Lord Phillips MR and Jonathan Parker LJ agreed) said, “It is, I regret to say, elementary common fairness that neither parties to the litigation, their counsel nor judges should make serious imputations or findings in any litigation when the person concerned against whom such imputations or findings are made have not been given a proper opportunity of dealing with the imputations and defending themselves.” 35. This is not only required because of fairness to the party affected but also to avoid the Court falling into error – see for instance Co-operative Group (CWS) Ltd v International Computers[2003] EWCA Civ 1955 at [ 38]. As Megarry J memorably said in John v Rees[1970] CH 345 , 402, “As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were answered; of inexplicable conduct , which was fully explained…Nor are those with any knowledge of human nature who pause to think for a moment likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events” “It is, I regret to say, elementary common fairness that neither parties to the litigation, their counsel nor judges should make serious imputations or findings in any litigation when the person concerned against whom such imputations or findings are made have not been given a proper opportunity of dealing with the imputations and defending themselves.” “As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were answered; of inexplicable conduct , which was fully explained…Nor are those with any knowledge of human nature who pause to think for a moment likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events”