A woman who described herself as working in the ‘adult industry’ and was paid entirely in cash has had a partial victory against claims by HMRC for additional payments of income tax and penalties, after a First Tier Tribunal (FTT) found her under-declaration of income on a tax return was careless rather than deliberate
Gemma Scott was appealing against a HMRC closure notice in respect of her income for the year 2010-11 which was issued following an enquiry into her income tax affairs. HMRC was seeking additional payments of income tax of £4,2678 together with penalties of £2,289.
Her 2010–11 tax return showed net taxable profits of £6,686. The key issue in the appeal was whether or not unidentified bank deposits represented undisclosed trading income. [Mrs Gemma Scott and the Commissioners for Her Majesty’s Revenue and Customs, [2016] UKFTT 0599 TC05335].
Scott was represented at the tribunal by her husband, Keith Scott, whose main source of income was stated to be playing poker, and whose tax affairs were investigated by HMRC at the same time as those of his wife. The profits from his activities were all received in the form of cash but were regarded as non-taxable.
