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As a result of receiving information from the police suggesting the taxpayer had diverted confidential cash payments from his company in February 2015 HMRC opened an investigation. It concluded that two amounts unrelated to the confidential ones credited to the taxpayer’s bank account were undeclared income and in September 2017 issued a discovery assessment.
The taxpayer appealed.
The First-tier Tribunal said the taxpayer was a man of ‘impeccable character’ and disregarded the allegations about confidential payments which were found to be without foundation.
The first question for the First-tier Tribunal was whether the discovery assessment was stale. It accepted that the HMRC officer was unaware of a tax loss when he opened the investigation in February 2015 or at a meeting with the taxpayer in April 2015. The officer believed he made the relevant discovery in February 2017 after he had received an inadequate explanation for the...
