Current affairs This latter benefit is really significant. Often, the easiest people to reach are the people we already know but who have stereotyped us (i.e. commoditised us). They see us as the people who produce the accounts or management reports and it doesn’t cross their minds that we can also help them get their strategy or pricing right. For more information about RLM, see the following complimentary webinar information. Reserve your webinar seat now at: www1.gotomeeting.com/register/477975969 ‘Confidence, like art, never comes from having all the answers; it comes from being open to all the questions.’ Earl Gray Stevens
Checks and balances kept by First Tier Tribunal It is always good to hear that the checks and balances in the enquiry system do work at times. This was illustrated by a case heard by the First Tier Tax Tribunal in August 2010 and reported on 27 September 2010. The case is called Stephen Ho – TC00669. Mr Ho primarily worked from Heathrow as a taxi driver. HMRC was able to demonstrate that Mr Ho had been allocated cab tags at Heathrow on two days when his own records indicated that he had not worked. The inspector also prepared a cash flow summary which suggested that there were occasions when Mr Ho had negative cash on hand, which HMRC said indicated he must have had additional unrecorded cash takings. On the face of it HMRC had broken the records and had a fairly strong case. The inspector said that based on his findings, Mr Ho’s own records were worthless and should be disregarded and he calculated the taxable profits assuming that Mr Ho had two fares from Heathrow to Central London each time he was allocated a cab tag. Moreover, the inspector assumed that an experienced driver like Mr Ho would be able to find tourists in Central London who wanted to travel back to Heathrow on each occasion. Mr Ho did not agree with this and the case ended up before the First Tier Tribunal. After reviewing the facts and figures prepaid by HMRC, the members of the tribunal criticised the way that HMRC had gone about things. They did not accept that an experienced taxi driver would be able to find passengers in Central London who wanted to travel to Heathrow, bearing in mind a taxi for hire must take whichever passengers hail them. They also found that the inspector’s cash flow workings did not take proper account of the contributions to household expenses made by Mr Ho’s partner and furthermore the way the cash flow had been constructed was flawed. The tribunal concluded that Mr Ho’s tax return did not need to be amended. For many years HMRC inspectors have tried to break a taxpayer’s records and then substitute their own estimated numbers. This case was a salutary reminder to HMRC that they need to demonstrate that their alternative calculations must be based on a suitable evidential foundation. This reminder also goes for all small businesses that need to ensure that the quality of their records is good. This will be key in the event of HMRC enquiring into their results. This and other reported cases indicate that the First Tier Tax Tribunal and their members are showing no signs of cosying up to HMRC and are taking a professional and independent view. For full details of this case visit: www.financeandtaxtribunals.gov.uk/judgmentfiles/j5036/TC00669.doc Peter Fry Professional Tax Consultancy T: 0845 854 3334 E: info@protaxconsult.com www.protaxconsult.com MiP News | 3