HMRC tax inspectors argued that Stephen Ho, who carries fares between Heathrow Airport and London, owed £5,400 in tax for the 2003/04 tax year rather than the £1,807 he had declared.
However, HMRC lost their argument on two counts at the First Tier tax tribunal.
Judges at the Tribunal slated HMRC’s conduct saying it was “unreasonable” in assuming that daily journeys conducted by Mr Ho between London and Heathrow, “two in, two out”, always had four fares on board.
They also added that HMRC’s cashflow test, which surveyed Mr Ho’s bill payments, was “flawed” and failed to take into account the timing of his outgoings.
HMRC had previously dropped other tax investigations into Mr Ho’s tax for the tax years 2002/03, 2004/05, 2005/06 and 2006/07.
The investigation dragged on for five years before eventually getting a decision at the First Tier tax tribunal in June this year.
It is thought that Mr Ho asked the First Tier tax tribunal to award costs against HMRC and “to consider an award towards the Appellant’s pain and suffering and loss of earnings since the enquiry started in November 2005” although no decision as yet to be made on that subject.
This is a case reminiscent of another case we took over that had been running for 12 years.
We have now got it before the First Tier tax tribunal for a hearing.
The inspector running the case was heard to say that he didn’t care if the taxpayer was made bankrupt.
Unfortunately there are inspectors who do not realistically deal with cases and adopt a holier than thou position allowing cases to run on for years which is an absolute disgrace.
The taxpayer pays no tax, HMRC get no income and public money is wasted by HMRC in pursuing these cases instead of settling them ASAP and getting money in.
If you feel that a decision made by HMRC is unfair then contact KinsellaTax.
KinsellaTax have proven results with cases going to the First Tier Tax Tribunal.
To find out how we can help, call us on 0800 471 4546, or click here to fill in a tax enquiry form.