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In Roger Whitlock v HMRC [2021] TC08136, the First Tier Tribunal (FTT) held that the appellant had clearly under-declared income from his sole trader business in 2015/16. The fact that the pattern was repeated allowed 'the presumption of continuity' that enabled discovery assessments to be raised for the previous five years.

A taxpayer's appeal against five years of Discovery assessments and a Closure notice was dismissed as HMRC were able to show that he had evidently concealed income, including by using a bank account in his mother's name to receive customer payments.

HMRC opened an enquiry into Mr Whitlock's Self Assessment return for the year 2015/16 as it included round numbers and unusually high expenses. The enquiry brought to light that:

  • Mr Whitlock kept very few business Records and did not issue invoices for his work.
  • He lied about not having a team of people that worked for him in order to disguise the size of his business.
  • He had submitted receipts for expenses paid in cash. The bank account records indicated that not all of this cash could be accounted for as income. HMRC concluded that not all income had been paid into the bank account. Mr Whitlock subsequently admitted that this was the case.
  • Further analysis of the account showed regular transactions with an account belonging to his mother. The account was not used by the mother and was, in fact, a 'ghost account' used by Mr Whitlock to receive trading income and pay some expenses.
  • In total, HMRC calculated approximately £38,000 had been under-declared for 2015/16.
  • Based on the evidence of under-declaration for 2015/16 and the fact that Mr Whitlock's business had not appeared to vary in size at all in the previous five years (and again figures in the returns were in round numbers), HMRC issued discovery notices on the grounds that there was nothing to suggest that similar under-declarations had not also occurred in prior years. This was based upon the 'Presumption of continuity'.

Mr Whitlock Appealed to the FTT against the Closure notice for 2015/16 and the discovery notices for the previous five years. He was unable to offer any evidence to the contrary.

The FTT agreed with the evidence that HMRC presented and concluded that Mr Whitlock had Deliberately under-declared income. The appeal was dismissed.

Useful guides on this topic

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Closure Notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights? 

Investigations: the presumption of continuity
What is the Presumption of Continuity? When does it apply?

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External link

Roger Whitlock v HMRC [2021] TC08136


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