The taxpayer failed to disclose rental income or a capital gain on the disposal of a property but HMRC’s discovery assessment was reduced for the taxpayer’s allowable expenditure with penalties reduced accordingly and were further reduced because HMRC used incorrect minimum penalties in carrying out the penalty calculations.

The appellant was a teacher who retired in 2010. In December 1994, he purchased a flat in London for £60,000. He never lived in the property, but his self-assessment return for each tax year until 2013/14 included rental income. In February 2014, the appellant disposed of the property for £300,000. The appellant filed his tax return for 2013/14 on time but did not include any capital gain on sale of the property, or any rental income for that tax year. 

In July 2018, HM Revenue and Customs (HMRC) opened a compliance check (under FA 2008, Sch 36), and attached a list of information required. Following