UKFTT 140 (2010) Evans v Revenue & Customs

Allowable expenditure, Penalties - Some tax relief given

Case Summary:

Mr Evans was Clerk to the Birmingham General Commissioners.  For the thirty years prior to that he had been an Inspector of Taxes. He claimed tax relief on the costs of travel and secretarial assistance (most of the latter paid to Mrs Evans). HMRC disallowed most of the expenses for the year of enquiry and raised discovery assessments for the previous seven years. Penalties were also charged on the basis of negligent over claims.

Mr Evans produced no records to prove his expenses- not even the number of meetings of Commissioners he attended or the number of cases heard.

Despite the lack of records it was accepted he must have driven to attend the Commissioners meetings and £500 was allowed for each of the 8 years.

On the secretarial assistance Mr Evans paid his wife £15K (which she returned). HMRC estimated that on the basis of her workload and at £10 per hour £2,500 was more like it. The First Tier Tribunal allowed £11k. HMRC said Mrs Evans’ tax would be adjusted for the amount disallowed on Mr Evans. (It’s not clear why this concession was made)

Even though the fees were paid into a joint account of Mr and Mrs Evans the First Tier Tribunalaccepted he had paid her.

HMRC argued for a 35% penalty. The First Tier Tribunal increased this to 40% because of his poor cooperation.