Mohammed Ashraf v HMRC (TC06355).
An income and expenditure schedule was produced by HMRC which indicated a shortfall of approximately £258,000. This shortfall resulted in assessments being issued under TMA 1970, s 29 and, after further communication with Ashraf, penalties were applied.
It is particularly concerning that despite no source, or potential source, being named, HMRC was still seeking to tax an amount of money which existed only within an income and expenditure list produced by the department.
HMRC fully agreed it hadn’t found a source of income, even when prompted to offer a suggestion by the tribunal. This is effectively the same as stating: “there is money in your bank account and despite no evidence, we are going to state that it is taxable income”.
It is also a good reminder that a person having money available, does not automatically mean they have committed tax fraud.