In Dennis Lucas v HMRC [2025] TC09550, the First Tier Tribunal (FTT) found that discovery assessments issued to a taxpayer who had been misled by a repayment claims company were valid.
Dennis Lucas (DL), a UPS courier driver, engaged with 'Apostle Accounting Ltd' (AAL), a company that offered to obtain tax rebates for him relating to the cleaning of his uniform and subsistence expenses, for a fee of 20%+VAT.
- DL formally appointed AAL as his agent. AAL then assisted DL in registering for Self Assessment.
- DL had never completed a Self Assessment return, previously being taxed via PAYE.
- Other than one P60, AAL did not ask DL for details of income, expenses or receipts.
- In November 2020, HMRC received four tax returns for DL for the tax years 2017, 2018, 2019 and 2020. A further tax return for 2021 was submitted at a later date.
- AAL claimed £60 per year for uniform cleaning, and between £3,500 and £4,200 annually for subsistence.
- Based on the evidence provided, the FTT accepted that DL had not received or approved any tax returns prior to AAL submitting the returns.
- HMRC wrote to DL, outside of the normal enquiry window, to advise that they believed the claims were incorrect and that DL was not entitled to claim the subsistence expenses for the costs of his meals.
- Around the same time, DL complained to AAL, stating that he had no idea what AAL had made claims for and was relying on them to identify what he was entitled to claim. He requested that AAL deal with HMRC.
- In AAL's response, they stated, "We cannot possibly be accused of fraud, and HMRC would state that as you agreed to the claim and [sic] fraud allegation would be directed to you and not us acting on your behalf under your instruction. The police have been informed of your threats and harassment, and so has our solicitor".
- HMRC concluded there was an insufficiency of tax and Discovery assessments were issued to DL for the five years totalling £3,577. DL appealed to the First Tier Tribunal (FTT).
The FTT addressed the following issues:
- Whether the discovery assessments were valid and in time.
- Whether AAL were acting on behalf of DL.
- Whether DL had behaved carelessly and/or AAL had behaved carelessly in bringing about a loss of tax.
The FTT found that:
- Despite DL not having sight of or approving the actual tax returns, he had approved the calculations, in turn approving the amount of the claims. The FTT stated that although there was no authorisation to submit tax returns, there was authorisation given to submit claims, confirming that AAL were acting on behalf of DL.
- The discovery assessments raised for the earlier two years could only be valid if the loss of tax was brought about by careless or deliberate behaviour by DL or AAL.
- DL did not act deliberately but did act carelessly in that he did not query the amounts being claimed. The court did not deem DL to have brought on the loss of tax himself since the loss arose as a result of the submission of the returns.
- AAL were, however, acting on DL's behalf, and they did act deliberately. A competent agent would know that expenses could not be claimed in relation to meals.
- As a person acting on DL's behalf brought on the loss, the discovery assessments are valid.
The FTT said, "We have a great deal of sympathy for Mr Lucas who was misled by Apostle into authorising claims which he believed to be legitimate, but which Apostle knew were not. However, we must apply the law as it stands."
The FTT also drew attention to another 800 individuals misled by the claims company.
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?
Penalties: Self Assessment (SA) late filing, payment, notification and error
Self Assessment (SA) tax penalties: What penalties are due for outstanding tax returns? What penalties are due for late payment? Are there any situations where HMRC have allowed easement of penalites?
Self Assessment Return 2024/25: What's new?
2025 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2025.
Clothing
Can an employee claim tax relief on the cost of clothing? Can employers provide clothing? How are claims made?
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