Consideration of alleged carelessness of accountant

In January 2007 the taxpayers sold a property on a plot of land of about 0.7 hectares. This exceeded the permitted area of 0.5 hectares for only or main residence relief in TCGA 1992 s 222(2). They did not report the gain in their tax returns for 2006-07. The returns were prepared by their accountant. In March 2013 HMRC issued discovery assessments on the basis that only or main residence relief was not due.

The First-tier Tribunal dismissed the taxpayers’ appeal accepting HMRC’s contention that TMA 1970 s 29 and s 36 was satisfied by reason of the accountant’s carelessness. The taxpayers appealed. They said HMRC had raised the issue of the accountant’s carelessness too late to allow them time to rebut the point.

The Upper Tribunal said it had not been clear in HMRC’s statement of case to the First-tier Tribunal that it intended to argue...