Theft or understated profits?

Key points

• An accounting discrepancy in business accounts.
• Was there an accounting error evasion incorrect invoices or theft?
• There was no criticism of the accountant and the taxpayer was a credible witness.
• The standard of proof is the balance of probabilities.
• No conclusion was reached on the contention of theft.
• The importance of reviewing accounts in detail.

Tax inspectors of a certain vintage may remember what was for many their first step into the world of tax investigations: the accounts investigator course (AIC) which was the backbone of Inland Revenue training during the 1970s and 1980s. Among other things the course taught basic double-entry bookkeeping investigation law and practice the approach to penalties and so on. Its main emphasis was to highlight the myriad ways in which the accounts of self-employed taxpayers might be inaccurate.

Of course in those days...