Appealing Against a Tax Bill? Make Sure You Get a Fair Hearing!

If you dispute a tax bill, you are entitled to a fair hearing of your appeal and specialist advice will ensure you get just that. In a case that demonstrates this point, a couple were relieved of a substantial Capital Gains Tax (CGT) demand after successfully arguing that they had not been treated even-handedly.

The couple had sold a plot of land on which was a house they had built for themselves, and outbuildings including a large shed. Disposal of a taxpayer’s principal private residence is exempt from CGT and, having taken advice from an accountant and a tax consultant, the couple made no reference to the land sale and reported no chargeable gain on their tax return for the year.

Several years later, however, HM Revenue and Customs (HMRC) served the couple with discovery assessments under Section 29 of the Taxes Management Act 1970 on the basis that the disposal of the land had not been wholly exempt from CGT. The couple challenged the decision before the First-tier Tribunal (FTT) which, whilst reducing the amount of the assessments, upheld them in principle.

In allowing the couple’s appeal against the latter decision, the Upper Tribunal (UT) noted that it had been HMRC’s case throughout the FTT hearing that the failure to declare a CGT liability arose from the couple’s carelessness. Only after all the evidence had been heard did HMRC shift its ground and allege for the first time that it was not the couple but their advisors who had been careless.

In those circumstances, the hearing had not been fair in that neither the couple nor their advisors had been afforded an opportunity to deal with that late allegation. Whilst acknowledging the public interest in the correct amounts of tax being collected, the UT noted that the land had been sold more than a decade ago. Citing the need for finality, the UT declined to remit the case to the FTT for fresh consideration and overturned the assessments.