In Adrian Omar v HMRC [2018] TC6962, the first tier tribunal (FTT) held that a taxpayer had not been careless in claiming excessive tax relief for pension contributions.
- The taxpayer was a member of an occupational pension scheme to which the employer contributed.
- Before 2012, the employer allowed the taxpayer to sacrifice salary in return for greater pension contributions
- The taxpayer claimed for contributions on the basis of his payslips rather than the pension fund statement
- It was not clear whether an item on that statement described as “your employer’s single contribution” was funded by the taxpayer or employer.
HMRC raised Discovery Assessments.
As these were raised more than four years later HMRC had to show that the taxpayer had been careless in order to extend the Discovery Time Limit to six years.
HMRC also imposed penalties which it later agreed to suspend.
The taxpayer appealed to the FTT.
The tribunal noted the lack of documentary evidence and sketchy recollections of the taxpayer.
It dismissed the three arguments for carelessness that HMRC had “gallantly made”:
- The taxpayer had not appealed against the penalties and therefore accepted he had been careless. The tribunal said he did not appeal because he was satisfied with suspension.
- The taxpayer had not looked at HMRC’s published material. The tribunal said that the taxpayer relied on professional advisers which should be sufficient.
- The taxpayer may have misunderstood what he was told. The tribunal said that misunderstanding advice is not carelessness.
The FTT concluded that the taxpayer has not been careless: the discovery conditions were not met and therefore HMRC's assessments were invalid
Our guides
How to appeal a tax penalty
Essential reading in cases were there are penalties too
Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery.
How to avoid penalties for carelessness
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