Spc00676

PROFIT – whether evidence that the Appellant was overcharged by an amendment to his self-assessment – no – appeal dismissed

THE SPECIAL COMMISSIONERS

	M E WALSH	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		Special Commissioner: 	DR JOHN F. AVERY JONES CBE 

Sitting in public in London on 1 April 2008

H Naraine FCCA ACIS, H Naraine & Co, Chartered Certified Accountants, for the Appellant

Warren Mitchell, HMRC Appeals Unit, London & Anglia for the Respondents

© CROWN COPYRIGHT 2008

DECISION

1.	Mr M E Walsh appeals against an amendment to his self-assessment for 2003-04.  The Appellant was represented by Mr H Naraine, and the Respondents (“the Revenue”) by Mr Warren Mitchell.
2.	The issue in this appeal is whether certain expenses are deductible in computing the Appellant’s profits for the year ended 5 April 2004.
3.	I heard evidence from Mrs Jeanette King, HM Inspector of Taxes (“the Inspector”).  I find the following facts:
(1)	The Appellant started business as a self-employed general builder on 6 February 2003.
(2)	The Inspector opened an enquiry into the Appellant’s self-assessment for 2003-04 on 31 August 2005.  The Inspector asked for sight of the business books.  They were not provided and so the Inspector issued a s 19A TMA 1970 Notice on 5 October 2005.  This was not complied with and a £50 penalty was imposed on 1 December 2005.  No further information was ever supplied by the Appellant.
(3)	The Inspector was concerned about the following: £3,867 for cost of sales because the CIS25 vouchers did not include any payment for materials; subcontractor costs of £470 because the Appellant was not registered to make payments to subcontractors; other direct costs of £4,802 about which she had no information; employee costs of £2,210 because the Appellant was not registered for PAYE; premises costs of £2,288 which she thought unlikely to have been incurred; and various other expenditure.  The closure amendment was to add back the cost of sales, sub-contractor costs and other direct costs and 90% of the indirect costs apart from accountancy fees of £720 which she allowed in full.
(4)	The Appellant has tried to obtain the business records from his previous accountants, RJ Consultants, but has been unsuccessful.
(5)	On 22 March 2007 I directed that both parties provided any documents, witness statements and skeleton arguments 14 days before the hearing.  The Revenue complied fully but nothing was provided by the Appellant.  I allowed Mr Naraine to produce some documents as Mr Mitchell did not object and they were already included in the Revenue’s bundle.
4.	Mr Naraine contended:
(1)	It was up to the Revenue to prove the amendments to the self-assessment.
(2)	The accounts prepared by RJ Consultants, accountants, were correct.
5.	Mr Mitchell contended that the burden was on the Appellant to show that the figures in the amended self-assessment were wrong, which he has failed to discharge.
6.	Section 50(6) of the Taxes Management Act 1970 provides:
“(6) If, on an appeal, it appears to the majority of the Commissioners present at the hearing, by examination of the appellant on oath or affirmation, or by other … evidence,—
(a)     that, … the appellant is overcharged by a self-assessment;
…
the assessment…shall be reduced accordingly, but otherwise the assessment or statement shall stand good.”
7.	The Appellant has given me no evidence from which I could conclude that the Appellant was overcharged by the amended self-assessment and accordingly it must stand good.  I offered to give the Appellant time to obtain secondary evidence of expenditure, such as bank statements, but Mr Naraine declined the invitation.
8.	Accordingly I dismiss the appeal and confirm the amendment to the Appellant’s self-assessment (tax and NIC due £9,659.81).

JOHN F. AVERY JONES

SPECIAL COMMISSIONER
RELEASE DATE: 4 April 2008

SC 3006/07

Authorities referred to in skeletons and not referred to in the decision:
Gaughan v HMRC [2007] STC (SCD) 148
Ferriby Construction (UK) Limited [2008] STC (SCD) 234
Hurley v Taylor (1998) 71 TC 268
Morris v HMRC [2007] EWHC 1181 (Ch)