In Graham Michael Wildin v HMRC [2022] TC08394, an accountant failed in an appeal against £297,630 in Income Tax, VAT, tax penalties and VAT surcharges: after failing to provide evidence that he was conducting a trade. No capital allowances, input VAT and income tax loss relief could be claimed.

  • Mr Wildin, a fellow of the Institute of Chartered Accountants in England and Wales (ICAEW), ran a large accountancy practice and lived in a large five bedroomed property that already incorporated an Oriental garden, outdoor play areas, a vintage car showroom, an indoor swimming pool and an amusement arcade.
  • In 2013, work commenced on a sports and leisure complex in the estate (comprising the house and adjoining properties) to include:
    • A sports hall.
    • Squash court.
    • Ten-pin bowling alley.
    • 16 seater cinema.
    • Small casino.
    • Fully equipped gym.
  • The building led to a dispute surrounding planning permission and Mr Wildin gave several high profile interviews (including to the Daily Mail) detailing how the complex was for the use of himself and his family to allow them to spend quality time together.
  • In 2013, Mr Wildin registered for VAT and incorporated two companies for Furnished Holiday Letting.
  • Mr Wildin claimed Input VAT on the construction costs of the complex.
  • He also filed VAT invoices for a file management and storage business, although no signed agreements for the business were produced.
  • Tax returns for the holiday lettings, storage and hire of the sports complex by his daughter were filed showing nominal turnover and large losses, including Capital allowances claimed for the complex.
  • HMRC enquiries led to a criminal investigation being opened by the police.
  • After HMRC raised Closure Notices, Discovery Assessments, penalties and VAT surcharges, Mr Wildin appealed to the FTT.

The FTT found that, despite complicated financial arrangements with his children including charging for the use of the properties facilities, there was no evidence of any business being carried on. This was supported by Mr Wildin's previous claims that the facilities were purely for private use. He was unable to provide any evidence to the contrary nor any reasonable excuse as to his failure to pay his liabilities. The appeal was dismissed.

Useful guides on this topic

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?

Penalties: Errors in Returns & Documents
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?

Furnished Holiday Letting
What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?

Plant & Machinery: Allowances
What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities?

External link

Graham Michael Wildin v HMRC [2022] TC08394

Squirrel ad

Are you enjoying our content? 

Thousands of accountants and advisers and their clients use as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter