Summary
The omission of taxable income by a company (through an adviser) resulting in overstated losses in its tax returns was careless, and ‘potential lost revenue’ (by reference to which the penalties were calculated) was not nil, as the evidence was not sufficient to find that there was no reasonable prospect of the company's losses being used.
Background
HM Revenue and Customs (HMRC) opened an enquiry into the appellant company’s corporation tax return for the accounting period ended 31 May 2010. It transpired that dividend income of over £3 million, which was excluded from the company's taxable income, was taxable under CTA 2009, s 931W. Following an enquiry into the company's accounting period ended 31 May 2011, it was accepted that dividend income of almost £900,000 was similarly taxable.
The effect of the company omitting the
