In Dr Marie Hallen & Dr Anette Persson v HMRC [2020] TC7775, the First Tier Tribunal (FTT) upheld penalties for inaccuracies in tax returns relating to a tax avoidance scheme. The taxpayers knew their returns were wrong, their behaviour was deliberate.

Under schedule 24 Finance Act 2007 a tax-geared penalty can apply when there is a potential loss of tax if:

The rate of penalty charged depends on the behaviour of the taxpayer and whether it is deliberate.

Drs Hallen and Persson were dentists working through a company of which they were directors, NHP.

The FTT found that the returns filed by Dr Persson and Dr Hallen were inaccurate as the expenses claimed were never incurred, and that both taxpayers were aware of this when the returns were filed by their agent. Their behaviour was deliberate and the penalties stood as raised with no reductions.

The new advisers for Drs Hallen and Persson tried to introduce several grounds of appeal about the validity of the discovery assessments. The judge could not consider these as the assessments themselves had not been appealed; only matters pertinent to the penalties raised could be dealt with. For the same reason, the Tribunal could not make any comment or judgment about whether the tax avoidance scheme entered into here worked.


Penalties: Errors in Returns and Documents (subscriber version)
What penalties apply if you make an error or mistake? How are penalties calculated? How do you check penalties? What can you do if you receive a penalty?

Contractual disclosure facility CDF
HMRC has offered a contractual disclosure facility CDF since 31 January 2012. If HMRC writes to an individual about a suspected tax fraud they will be offered the CDF.

Client guide to 'Reasonable care and tax penalties'
A single tax penalty regime has applied across the main taxes from 1 April 2009. This is a guide to print out and discuss with clients.

External link

Dr Marie Hallen & Dr Anette Persson v HMRC [2020] TC7775