Summary
The appellants’ appeals against penalty determinations by HM Revenue & Customs (HMRC) for negligently delivering incorrect tax returns for 2005/06 were allowed after HMRC failed to adduce evidence to support the negligence alleged against the appellants.
Background
The appellants entered into a marketed tax avoidance scheme in 2005, with a view to sheltering chargeable gains realised on the disposal of shares in a company. The scheme involved generating capital losses on the acquisition and disposal of capital redemption policies. HMRC opened an enquiry into the appellants’ tax returns for 2005/06. Following the Court of Appeal decision in Drummond v HMRC [2009] EWCA Civ 608 that the scheme was ineffective, the appellants accepted that the tax was due.
However, HMRC considered that the appellants had negligently delivered incorrect returns,
