HM Revenue & Customs (HMRC) opened an enquiry into the tax return of a self-employed Hackney cab driver for 2006/07. HMRC concluded (among other things) that the profits declared were too low. Notices of assessment and penalty determinations were issued for the tax years 2005/06 to 2009/10 inclusive. The taxpayer appealed.
HMRC contended that the taxpayer's records could not be accepted as a complete and correct return of income and expenditure. HMRC argued that they were entitled to extend their assessments beyond the year of enquiry, referring to Jonas v Bamford [1973] STC 519 as authority for doing so, based on a ‘presumption of continuity’.
The taxpayer recorded taxi journeys on slips of paper, which were used to complete a ‘taxi book’ and then destroyed. HMRC considered that the slips of paper were the “prime record of his sales”. However, the First-tier Tribunal (FTT) was
