Wrong but not negligent

The taxpayer deposited money in joint bank and building society accounts in the names of himself his wife and three children. He apportioned the interest between the accountholders and included in his tax returns the proportion relating to himself.

HMRC said that the interest accruing on the accounts was taxable on him because he was solely responsible for funding the accounts and was the beneficial owner. The department raised assessments for the years 1996/97 to 2009/10 and imposed interest and penalties. The taxpayer appealed.

The First-tier Tribunal accepted that the taxpayer had set up the accounts to provide a family fund that any member of the family apart from himself could draw on. The judge believed the taxpayer when he said he had understood from the Revenue that the interest could be split between each family member and reported on their respective tax returns.

But although...