Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Inappropriate penalties

23 August 2016
Issue: 4564 / Categories: Tax cases

A Bayliss (TC5251)

Incorrect return delivered fraudulently or negligently

The taxpayer claimed a capital loss in his tax return which he sought to offset against capital gains. The loss arose from participation in a marketed planning arrangement that was found not to work. The taxpayer accepted this and withdrew his loss claim. HMRC said he had submitted an incorrect return fraudulently or negligently and imposed penalties under TMA 1970 s 95.

The taxpayer appealed against the penalties.

The First-tier Tribunal found that the taxpayer had not acted fraudulently. The judge said the fact that he had claimed a loss when he knew that he had not made ‘an economic loss of that amount’ did not indicate fraud. The tax system is complex and there are instances when the calculation of a profit or loss for tax purposes is different from the economic one. The taxpayer’s state of mind was important – did he...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon