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The taxpayer was persuaded by L to put his life-savings into a firearms-trading company. L claimed the taxpayer would make substantial profits when the guns were sold.
Under the arrangement the taxpayer would be told when suitable items were available for purchase and the amount he needed to lend to L.
L told the taxpayer he would not need to declare income to HMRC. The taxpayer who was not a financially sophisticated individual appeared to believe L who was a respected gun trader and also an accountant.
During the three-year period of investment L sent the taxpayer documents that indicated he had been credited with interest of more than £300 000 but that all had been reinvested.
HMRC issued assessments charging tax on the interest. The taxpayer appealed.
The First-tier Tribunal reviewed the evidence in detail. Describing the case as ‘very unfortunate’ the...
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