In Jason Callen v HMRC [2022] TC8392, a tax adviser who copied and pasted tax return entries on the advice of a tax scheme promoter without further independent thought on the merits of those entries, was careless. His actions allowed Discovery tax assessments by HMRC.

  • Mr Callen took part in a tax scheme promoted by Montpelier. The Upper Tribunal decided in the case of Clavis Liberty 1 LP v HMRC [2017] STC 2392 that the scheme did not work.
  • HMRC investigated Mr Callen and made Discovery Assessments for 2008-09 and 2009-10 of over £800k.
  • HMRC’s assessments, made outside of normal time limits, hinged on HMRC’s claim that either the taxpayer or his accountant had been careless in making Mr Callen’s tax return.

The taxpayer appealed the assessments to the First Tier Tribunal.

  • The FTT heard evidence from Mr Callen’s tax adviser, Mr Bevis, noting his evidence was “inconsistent and evasive on numerous occasions”.
  • Under the scheme, Mr Callen had claimed expenditure that was not incurred, had no entitlement to losses and had claimed to be trading in dividends, which he was not.
  • Mr Bevis had prepared the tax returns and with little experience in marketed tax avoidance schemes he copied and pasted return entries according to instructions by the scheme promoters.

The FTT noted that Mr Bevis:

  • Did not understand the tax scheme or seek the advice of someone with more expertise.
  • Did not seek to question his client about the trading activities claimed on the returns nor any of the expenditure claimed and paid little, or no, regard to the information he was providing to HMRC.

The FTT found that Mr Bevis carelessly brought about the insufficiency in Mr Callen’s tax assessments.

On finding that the adviser was careless, the tribunal did not need to make similar findings of the scheme promoter or the taxpayer.


This decision was made easier for the FTT as Mr Callen represented himself and the FTT was able to follow the UT decision in HMRC v John Hicks [2019] UKUT0040, which featured the same adviser. 

The FTT did not need to make findings of careless on the taxpayer or the scheme promoter, as you only need one 'rotten apple' in the equation of taxpayer, adviser, or advisers' adviser, to meet that part of the Discovery rules. 

On a professional level, tax advisers and accountants must all follow Professional Conduction in Taxation or if not a member of a professional body, HMRC's Standard for Agents. In addition, under the Anti-Money Laundering regulations an adviser would need to consider their reporting obligations in such a situation where a client says that they undertake a trade, and there is no evidence of such activity.

Useful guides on this topic

Statutory Review
What is a Statutory Review? Do you ask for one or is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review?

How to appeal a decision of HMRC
What type of decision is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Discovery assessment and time limits
HMRC have the power to re-open a past year of assessment if they discover a past under assessment that results in a loss of tax, and raise a Discovery Assessment. 

External links

Jason Callen v HMRC [2022] TC8392

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