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An important new penalty case.
KEY POINTS
- The client was a user of the ‘Pendulum Long’ tax scheme to claim capital losses after seeking advice.
- HMRC investigated the client for tax fraud under COP 9 and issued penalties.
- First-tier Tribunal heard the case on whether the client had acted ‘fraudulently or negligently’.
- Litman was not relevant.
- Reliance on professional advice is a strong argument in favour of behaviour with reasonable care.
The dispute between Anthony Bayliss and HMRC was decided by the First-tier Tribunal (TC5251) in favour of the taxpayer (my client). Despite HMRC demanding a significant penalty (35% or £45 000) the tribunal decided that Mr Bayliss had been neither fraudulent nor negligent and hence no penalty was due. It is an important result in the tapestry of penalty cases not only because of HMRC’s behaviour...
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