The Upper Tribunal held that despite errors of law in the First-tier Tribunal’s decision, the appellants’ appeal against penalties for incorrectly claiming business losses incurred by a company would be dismissed, as the FTT’s decision had no effect on the outcome of the penalty appeal.  

In the tax years 2009/10, 2010/11, 2011/12, and 2012/13, the appellants were involved in a property development business carried on in Poland. In their self-assessment returns for those tax years, the appellants claimed income tax relief for losses incurred in connection with that business.  

However, HM Revenue and Customs (HMRC) formed the view that the losses were not incurred by the appellants, but by a company incorporated in Poland, which they controlled. HMRC concluded that the appellants were not entitled to claim