Judge accuses HMRC of making up figures to terrorise people

A tax case spotted in the FT via Twitter:

The UK tax authority has been accused of making up figures to terrorise people by a judge who said a six-figure bill had been “plucked from the air” to frighten a taxpayer receiving incapacity benefit.

Experts warned the case was part of a trend of HM Revenue & Customs making mistakes and failing to properly check demands issued to taxpayers.

https://www.ft.com/content/2d89a7ce-cd83-11e9-b018-ca4456540ea6

And from the judgment:

We have seen nothing whatsoever in the documentary evidence to suggest that any thought, consideration or analysis whatsoever was undertaken by either the assessing officer and/or the Review officer to decide whether taking a net profit figure of 50% of supposed turnover was or was not a reasonable basis upon which to proceed. We are firmly of the view that that figure was simply “plucked from the air”.

Furthermore, the HMRC officer seems to have given no consideration to the plausibility of the absolute level of the net income figure. It seems in no way conceivable that an individual classified by the Department of Work and Pensions at the start of 2014/15 as unfit to work on account of their physical or mental impairment could earn £81,594 from their own efforts.

http://financeandtax.decisions.tribunals.gov.uk/Aspx/view.aspx?id=11298

I’m reminded of those cases where a local authority gets annoyed because a claimant hasn’t provided earnings information and imposes an overpayment on the assumption that they must have been earning £999 per week.