Businessman Reaps Whirlwind After Years of Inattention to His Tax Affairs

4th December 2023 By

Those whose tax affairs are allowed to fall into disarray must live in permanent fear that HM Revenue and Customs (HMRC) will in due course descend upon them. Such anxiety proved well justified in the case of a businessman who was on the receiving end of seven-figure back-tax assessments.

Following an investigation of his finances, the man received four VAT assessments and 20 Income Tax and Capital Gains Tax assessments, together with various late payment penalties. The earliest assessments related to the tax year ending in 1993. After HMRC launched proceedings, he missed the deadline for filing a defence and a default judgment was entered against him for over £2.5 million.

HMRC subsequently obtained final charging orders over various properties he owned, including his home, and sought an order for their sale so that the proceeds could be used to discharge the judgment debt. Although he had made some payments following the sale of properties, the debt still stood at over £1.3 million and, with interest, was continuing to increase.

Arguing that the default judgment should be set aside, the man contended, amongst other things, that the tax assessments were overblown and that it would be a breach of his human rights were he prevented from defending HMRC’s claim. He said that he never intended to default on his tax obligations but had received poor advice which he did not question for many years.

In explaining his inattention to his tax affairs, he said that he had for several years devoted himself to caring for his wife, whose death from cancer had caused him considerable distress. More recently, he had been in poor health himself, having suffered a stroke and undergone surgery for prostate cancer.

In granting HMRC’s application, however, the High Court found that he had no real prospect of successfully defending the claim. Given that his remaining portfolio of properties was estimated to be worth £3.25 million, HMRC had indicated that it would only sell properties to the extent necessary to recover the debt. His family home was for the time being excluded from the order for sale.

Source: Concious

Latest News

Award That Requires Borrowing Made Into Court Order

17th May, 2024 By

Disagreements between separating couples all too often result in litigation that substantially reduces the assets available to them, as was illustrated by a case that recently reached the High Court. At issue was whether awards made by arbitrators in financial remedy proceedings can be made into court orders even if that would require one of the parties to borrow money. The couple had previously had a relationship lasting a few years before resuming their relationship in 2015. They had two children before separating again in 2019. Following their separation, the...

Inheritance Disputes – Costs Risks Can Be Reduced

15th May, 2024 By

Arguments about what someone promised before their death can lead to significant legal costs. However, if faced with a claim against the estate, there may be steps the beneficiaries or executors can take to reduce the risks, as a recent High Court case illustrated. A man had left a farmhouse and agricultural land in Cornwall to his wife, with whom he had also jointly owned a neighbouring area of land. After his death, one of the couple's daughters and her husband claimed that he had told them he wanted them...

Share Rounding Error Does Not Prevent CGT Relief

13th May, 2024 By

There are often very specific rules that must be complied with in order to claim tax reliefs, but if a small mistake arises, the courts may be able to provide assistance. In a recent case, the First-tier Tribunal (FTT) found that an investor was entitled to Entrepreneurs' Relief on the disposal of his shares in a company, despite owning one share fewer than he needed to qualify for it. The investor had agreed to purchase 5 per cent of the shares in the company for £500,000. He wished to own...

Wife Entitled to Maintenance Until Sale of Family Home

10th May, 2024 By

When divorcing couples disagree on how assets should be divided, the courts will seek to arrive at a fair outcome for both parties. In deciding how the proceeds of sale of a former couple's home should be apportioned, the Family Court agreed with the wife that she should receive maintenance payments until the sale took place. The couple had married in 2006. Following a brief separation, they had reconciled for two years before finally separating in 2022. The husband and wife both contended that they should be entitled to about...