In Brimheath Developments Limited & Michael Victor Burgess v HMRC [2013] TC 03438 the FTT found that the taxpayers had failed to discharge the required burden of proof in connection with discovery assessments to demonstrate that they were unfair and were not based on inferences from the available evidence.

Note: this decision has been overturned on appeal to the Upper Tribunal: see Burgess & Anor v HMRC [2015]


If HMRC discovers undeclared income or gains:

  • It may make a tax assessment to recover the tax loss.
  • It may only do so if  one of two conditions in section 29 (4) or (5) is met. In this case, HMRC made the discovery on the basis of s.29(4): that it was as a the result of careless or deliberate actions by taxpayers or persons acting on their behalf.
  • The onus is on the taxpayer to rebut the assessment, but this does not allow HMRC to make "wild or extravagant" claims.
  • If a taxpayer fails to show that he has been overcharged, the assessment stands (section 50(6), TMA 1970).

The facts

  • The Metropolitan Police found a safe deposit box belonging to Michael Burgess containing £97,970 in cash and reported this to HRMC.
  • HMRC also found that certain unidentified payments had been made into the bank account of Mr Burgess' girlfriend (Ms Bather).
  • HMRC assessed Mr Murphy and his company, Brimheath Developments Limited for unpaid tax on what it supposed was undeclared income.

The FTT found that the evidence from Mr Burgess and his witnesses "was often contradictory, inconsistent and at times simply not credible". Mr Burgess and Brimheath had neither had discharged the burden of proof to rebut the assessments raised.

As the tribunal said: "We therefore conclude that there were grounds on which HMRC could base the assessments on Mr Burgess and that the evidence adduced by and on his behalf is insufficient to displace the assessments raised against him which must therefore stand good."


Brimheath Developments Limited & Michael Victor Burgess v HMRC TC 03438