A leading barrister has failed in his latest appeal to an Upper Tribunal in a long running dispute about over more than £1m of penalties imposed by HMRC for his failure to comply with three information notices, two relating to income tax and one in connection with inheritance tax relating to the estate of his late father
The case concerned Romie Tager QC, and turned on whether the Upper Tribunal could admit new evidence regarding the amount of ‘tax at risk’ to be used when calculating tax-related penalties for failing to comply with information notices, as the penalties had already been finally determined. [The Commissioners for Her Majesty’s Revenue and Customs and Romie Tager QC the personal representative of Osias Tager deceased [2017] UKUT 0084 (TCC)].
In the first decision released in this case, the Upper Tribunal imposed penalties of £75,000 for Tager’s failure to comply with the two income tax information notices and £1.17m for his failure to comply with the inheritance tax (IHT) information notice. The penalties determined represented 100% of the ‘tax at risk’.
In the second decision released in this case, the Upper Tribunal accepted that it should correct its first decision, because the evidence regarding the amount of ‘tax at risk’ was not as the tribunal had thought it was. The parties were sent away to try and agree the correct value.
By the time of this third hearing the income tax liability had been agreed at £1,250 (compared to HMRC’s original £80,000 estimate). There was still no agreement about the IHT liability – HMRC’s initial estimate was £1.17m, whereas Tager put it at no more than £61,500.
The Upper Tribunal focused on whether it was open to it to re-visit penalties it had already determined on what, in one case, was and, in the other, might have been a materially false understanding of the amount of tax at risk.
In the event, the Upper Tribunal decided that it was mistaken in its second decision to take the view that it could still consider the penalties. It also concluded that it did not have the jurisdiction to admit the new evidence on which Tager sought to rely, and that it had been mistaken in inviting the parties to agree upon the correct amount of tax at risk.
The Upper Tribunal did adjust the IHT penalty to correct an error in relation to the value of the deceased’s house and other minor adjustments, to leave a revised penalty figure of £1m, compared to the original £1.17m.
Wolters Kluwer tax writer, Meg Wilson said: ‘This is unlikely to be the last we hear about this dispute as it is understood that the taxpayer intends to challenge the UT’s whole approach to the setting of the tax-related penalties.
‘The taxpayer now has professional help from both solicitors and accountants. However one cannot help but think that if the taxpayer had appreciated that he needed professional help earlier he would never have got into the position of being charged non-compliance penalties in excess of £1m.’
The Commissioners for Her Majesty’s Revenue and Customs and Romie Tager QC the personal representative of Osias Tager deceased [2017] UKUT 0084 (TCC) is here.
