In Kujtim Gjoci v HMRC [2016] UKFTT TC05325 a plumber who did not keep records had a good break on tax penalties. Apart from quoting the wrong legislation First Tribunal (FTT) did not spot that penalties for a deliberate error are not normally capable for suspension

Section 12B(1) TMA 1970 requires an individual to keep all records enabling him to deliver a complete and correct return for six years.  Section 29(1) TMA 1970 provides that HMRC can raise an assessment if they discover that income which should have been assessed to tax has not been. 

Although the FTT cited s 95 TMA 1970 as the legislation in respect of penalties, since 2007 Schedule 24 FA 2007 sets out the tax penalty scale and suspension conditions in respect of penalties: errors in returns and documents.

  • Mr Gjoci was a self-employed plumber and fitter.
  • HMRC enquired into his 2012/13 tax return after noting that his expenses were high in relation to his £44,000 turnover.
  • HMRC requested evidence to verify Mr Gjoci’s income and expenditure, but very few records were produced.
    • Cash deposits of £13,180 were paid into the bank but not included in turnover; no evidence was available to show that these deposits were not sales.
    • Motoring expenses in the accounts were £6,750 but Mr Gjoci was only able to produce invoices for £2,310.
    • There were no records at all, no employee names, National Insurance numbers, bank statements or payslips, to support a wages expense of £4,500.
    • There was no evidence to support £14,000 allocated to other expense headings.
    • Adopting the presumption of continuity HMRC raised assessments for a further four previous years and assessed tax of £43,657.63.  It suspended penalties of £6,550.

Mr Gjoci appealed both the assessments and the penalties however he presented no further evidence to the tribunal to identify deposits or support expenditure.

The FTT upheld HMRC's assessments.

On penalties it decided that Mr Gjoci's behaviour was deliberate, nevertheless it allowed a reduction in penalties and suspension of the penalties, as already given by HMRC.


Under Schedule 24 FA 2007 penalties are not capable of suspension if caused by the deliberate actions of a taxpayer. The taxpayer was also lucky that HMRC failed to assess him for six years as might also expected for deliberate conduct. 


Record keeping & tax: what, how and until when

Discovery assessments and time limits

Penalties: errors in returns and documents (includes conditions for suspension of penalties)

Case reference: Kutjim Gjoci v HMRC [2016] UKFTT TC05325