Tuesday Tax Case - 'Receipts Requested'

As broken today first on twitter (@mitchyoung27), every Tuesday I will now be commentating on a recent Tax Case first published in Taxation. Today's case concerns a taxpayer and his expenses being questioned by HMRC. The case is titled G C Catana (TC1482)

HMRC opened an enquiry into the taxpayers 2006/07 tax return. The individual has claimed expenses for the year totalling £17,000. HMRC has asked for all the receipts to back up this figure as well as asking for copies of the individual’s construction industry scheme vouchers and copies of all his bank statements. The letter was originally sent to the individual’s accountant with a copy being sent to him.

The individual responded by sending various documentation, however HMRC only allowed £400  out of the original £17,000 stated on the return. Furthermore the tax inspector also increased the net income of the individual on the grounds that the deposits into his bank account exceeded those shown on the tax return.

The individual appealed the result and, at the appeal, produced further receipts and invoices to back up the original figures. As a result of this, HMRC adjusted the result to allow the expenses of £12,523 and further capital allowances with the overall conclusion being the individual was actually now due a repayment. The appeal therefore was allowed and a conclusion was reached between the taxpayer and HMRC.

This case is by no means one of the big cases however what it does illustrate is the importance of keeping your records in order and having backups to all figures being declared on your tax return.

If you have any queries please do not hesitate to get in touch - mitch@ljd.uk.com

Mitch the Tax Man