Commissioners decision re missing records
In a recent case HMRC raised a reconstructed income tax assessment following a lack of information received by the taxpayer. The taxpayer appealed the assessment. HMRC explained that they had tried on a significantnumber of occasions to obtain information from the taxpayer in order to raise a correct assessment. The taxpayer in this case had admitted that the initial return he submitted was completed incorrectly but refused to provide any relevant information to support either the original or reconstructed return. The taxpayer allegedly signed the return on the day of his father’s funeral but was unable to provide any further supporting papers subsequently.
The Special Commissioner found that HMRC were not unreasonable in issuing a reconstructed return and commented that the burden of proof was on the taxpayer to prove that the return was incorrect. The appeal was dismissed although the Special Commissioner allowed some deductions to the taxpayer which he described as “generous treatment to the Appellant” who was not present for the hearing.
Although this case rested on some unusual facts, it provides a useful reminder to taxpayers of the importance of retaining proper records and providing reasonable responses to valid requests for information from HMRC.