UKFTT 275 (2009) Cooksey and Mrs C Cooksey v HMRC

Investigation - HMRC won

Case Summary: 

The Cookseys resisted assessments bringing out £122K over 20 years. Mr Cooksey was investigated by SCO and given Hansard but still did not make a disclosure. Criminal prosecution was considered but not pursued. HMRC alleged unrecorded cash sales hoarded offshore. Their previous advisers, Lathams, gave evidence for HMRC.

The nature of some of the arguments is indicated by this quote,

“Mr Webster placed great weight on the fact that Mr Cochrane was the author of a book on tax investigations titled “Guilty until proved innocent”.  He suggested that this demonstrated the attitude of Mr Cochrane and Lathams to their clients.  Mr Cochrane stated that, on the contrary, the title of the book was intended to reflect the feeling of many of his clients who, when under investigation and faced with the burden of disproving the assertions of HMRC, felt that they were having to prove their innocence.  The Tribunal has no difficulty in finding Mr Cochrane’s version the correct explanation.”

The Tribunal emphasised that the Cookseys bore the burden of proof of showing the assessments were incorrect and that despite implications of fraud at one time the standard of proof was the balance of probabilities.

Astonishingly, HMRC gave the following assurance,

“HMRC did not intend and undertook not to charge any penalty in relation to any of the amounts charged by the assessments under appeal”. But HMRC reserved the right to charge interest. The penalty concession may simply have been because the Cookseys did not have the means or maybe because of concerns about the fair trial rules in Article 6 of the Human Rights Act as direct tax penalties for negligence or fraud are criminal for HRA purposes.

The assessments were confirmed