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Discovery assessment invalid

03 June 2019
Issue: 4698 / Categories: Tax cases , Self assessment
CRC v Tooth, Court of Appeal, 15 May 2019

The taxpayer participated in a tax avoidance scheme designed to produce an income tax loss in 2008-09 which he was advised could be set against his 2007-08 liability. His accountant was unable to enter the loss on his return because the software he used did not cater for employment losses incurred in a later year and carried back. So the taxpayer entered the loss on the partnership pages of his return and explained why in a white space disclosure pointing out that it was an employment loss and not a partnership loss that was being claimed.

HMRC enquired into the claim but did not raise an enquiry into the 2007-08 return. After the Supreme Court’s decision in CRC v Cotter [2013] STC 2480 HMRC wrote to the taxpayer stating that as a result of that case the tax was due for collection. The taxpayer argued that Cotter...

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