There has been a huge amount of publicity recently concerning tax avoidance, but sometimes it pays to remember it’s not always obvious who the “good guys” are.
According to Susan Lewis “Sometimes perfectly legitimate tax schemes are challenged by the authorities using bullying tactics that are quite unacceptable. Every so often the little guy wins, and cheers us all up.”
Such has happened recently when the HM Revenue and Customs were given short shrift in a case where the tax tribunal was clearly unimpressed by the tactics adopted by HMRC, commenting that their ‘attempts to exclude evidence on what we consider to be mostly ill conceived grounds…was all the more unsatisfactory in the light of the fact that…other cases have been stood over pending the result in this case’.
The case involved a family, consisting of a mother and her three children, who owned a cottage they used for holiday letting. When the mother died, Business Property Relief (BPR) was claimed, which would reduce the value of the property in her estate for Inheritance Tax (IHT) purposes. However, HMRC decided they couldn’t, and the dispute ended up in court.
Finding against them, the tribunal said HMRC were very aggressive in their behaviour towards the family, despite themselves failing to meet deadlines for the service of documents. HMRC also applied for their costs to be met by the family in the event that HMRC won the case.
Susan Lewis comments: “All in all, the case amounts to something of an own goal for HMRC, and illustrates that it can pay to stand up to bullying tactics.”