Firth vs HMRC

This case concerned a dispute between Firth and HMRC over the interpretation of 'deliberate' in the context of tax assessments, with significant implications for the remittance basis of taxation.

TLDR:

• Firth challenged HMRC's tax assessment based on alleged deliberate behavior.
• The Tribunal examined the interpretation of 'deliberate' under the tax statute.
• The Tribunal found in favor of Firth, setting aside the 2015-16 assessment.
• The Tribunal directed parties to agree on the quantum of remittances.

The appellant, Firth, contested a tax assessment issued by HMRC, arguing that the assessment was based on an incorrect interpretation of 'deliberate' behavior. HMRC had issued a discovery assessment alleging that Firth had deliberately understated his tax liabilities by omitting certain remittances to the UK.

During the appeal hearing, HMRC's officer stated that they were not alleging that Firth's actions were careless or deliberate. However, HMRC's case was pleaded on the basis of deliberate behavior without amending their pleadings. The Tribunal found that HMRC failed to substantiate the issue of deliberateness under the gateway conditions in s 29(4) TMA.

The Tribunal also considered the remittance basis of taxation and the interpretation of 'brought to' in s 809L ITA 2007. The Tribunal concluded that Firth had made taxable remittances by initiating bank transfers from his offshore account to UK bank accounts of non-relevant persons.

Additionally, the Tribunal examined the use of offshore credit cards for making purchases in the UK. It was held that such transactions created a relevant debt, and payment of the credit card account from an offshore bank account amounted to a remittance.

In conclusion, the Tribunal allowed the appeal in part, setting aside the 2015-16 assessment but directing the parties to agree on the quantum of remittances. The Tribunal emphasized the importance of adhering to statutory interpretations and the consequences of failing to meet tax obligations.

Legal representatives: Mr. Firth for the appellant, Mr. Hunter for HMRC.

Judicial Panel: Tribunal Judge Natsai Manyarara

Case Citation Reference: [2024] UKFTT 412 (TC)