Milligan v Revenue and Customs (INCOME TAX - whether behaviour leading to loss of tax was deliberate, extending the time period for assessment) [2025] UKFTT 498 (TC) (01 May 2025)

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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Milligan v Revenue and Customs (INCOME TAX - whether behaviour leading to loss of tax was deliberate, extending the time period for assessment) [2025] UKFTT 498 (TC) (01 May 2025) URL: https://www.bailii.org/uk/cases/UKFTT/TC/2025/TC09507.html Cite as: [2025] UKFTT 498 (TC)

DECISION

Introduction

1. The appellant (Mr Milligan) appeals against nine assessments issued under s29 Taxes Management Act (TMA) 1970 for the tax years 2000/01 to 2008/09 (inclusive) and a penalty issued under s93(5) TMA 1970 for the failure to submit a self-assessment return for the same tax years.

Background

2. Mr Milligan filed self-assessment tax returns for the tax years 1996/97 to 1999/2000; thereafter it was not in dispute that he did not file returns for the tax years under appeal. It was not disputed that Mr Milligan received self-employment income during the tax years in question and that this was not declared by him to HMRC.

3. Following an investigation, HMRC issued discovery assessments for the tax years under appeal on 20 May 2013. The penalty was issued on 22 November 2016.

Whether notices to file issued

4. HMRC stated that they had issued notices to file under s8 TMA 1970 for each of the relevant tax years and provided details of the dates on which these were sent, confirming that they were sent to the address on file for Mr Milligan.

5. Mr Milligan suggested that he might not have received these but accepted that he did not always open mail received from HMRC and would generally leave unopened correspondence in a room in his house. In a search of the house in February 2012, HMRC found two unopened tax returns in the room, amongst other documents.

6. Considering the evidence, and on the balance of probabilities, we conclude that the notices to file for each of the tax years were sent to Mr Milligan.

Validity of assessments

7. s29(1) TMA 1970 provides (as relevant) that HMRC may raise an assessment if they discover that any income which ought to have been assessed to income tax has not been assessed. As no tax returns have been filed by Mr Milligan for the tax years in question, the conditions in s29(4) and s29(5) do not apply.

8. In a preliminary hearing in 2018, the Tribunal established that HMRC had made a relevant discovery in October 2011; the assessments were issued in May 2013.

9. For the tax years 2007/08 and 2008/09, the six-year time limit in s36(1) TMA 1970 applies if the behaviour which led to the loss of tax was careless. In a witness statement, Mr Milligan accepted that his behaviour was careless and confirmed this in the hearing. We therefore find that the assessments for 2007/08 and 2008/09 were validly raised.

10. For the earlier tax years under appeal, s36(1A) TMA 1970 provides that HMRC may issue an assessment within twenty years of the end of the year of assessment to which it relates where the loss of income tax is brought about deliberately by the taxpayer.

11. The initial question for this hearing was therefore whether the behaviour which led to the loss of tax was deliberate such that the twenty-year time limit in s36(1A) TMA 1970 applies and the assessments for 2000/01 to 2006/07 were validly raised.

Whether behaviour deliberate

12. The burden of proof is on HMRC to show that the behaviour which led to the loss of tax was deliberate; the standard of proof is the ordinary civil standard of the balance of probabilities.

Evidence and facts

13. Much of the evidence was unchallenged and therefore found as facts. Where a specific finding of fact was required because the evidence was either inconsistent, unclear, or challenged, we have set that out below.

Principal work

14. Mr Milligan primarily worked as a costume designer for the tax years in question, although he undertook other work as well from time to time, as set out below.

15. During the tax years under appeal, Mr Milligan was engaged directly by production companies and was paid directly by them. He had initially provided invoices but was advised that these were not necessary.

16. Mr Milligan contended that he assumed that the production companies were deducting tax from his payments as he thought that he was too junior to be treated as self-employed in the early 2000s. The evidence of various senior directors within the companies for whom Mr Milligan worked was that he was always engaged on a self-employed basis and that all payment advice to him stated that no tax or National Insurance had been deducted.

17. Mr Milligan stated that he had not realised that tax was not being deducted from the payments which he received. He had also not seen information on documents that stated that he was engaged as a self-employed individual. He accepted that he did not in fact pay any particular attention to documents received, including documents and payslips that clearly stated that no tax was being deducted from the payments made to him. He had only been concerned with how much he would be paid and how long he would be engaged for. He stated that he had not paid attention to how much he was being paid; he did not scrutinise payments too much provided that he had enough to cover the bills.

18. Mr Milligan also explained that he did not register for VAT because his personal turnover was below the threshold, as he was now working for larger production companies that did not generally required him to purchase costumes and equipment and invoice them for these. Instead, he would generally purchase the costumes and equipment using either float money provided by the company or a company credit card.

19. Having considered the evidence, we find that Mr Milligan was self-employed in these roles throughout the tax years under appeal.

Other work

20. In addition to his work as a costume designer, Mr Milligan provided costume hire and storage in a warehouse in Halifax. Mr Milligan agreed that this was always done on a self-employed basis and that he had not reported any of the income from this in the relevant tax years to HMRC.

21. Mr Milligan also took on small short-term contracts to find staff to undertake work for others; the work on the short term contracts was undertaken at the weekend. His evidence was that he had not thought about the tax consequences of the fees for the short-term contracts. He did not dispute, and we find as a fact, that this was undertaken on a self-employed basis.

Professional advice

22. Prior to the tax years under appeal Mr Milligan had worked through a company owned by himself and his wife; they had engaged an accountant who dealt with all of the tax aspects of the company. Mr Milligan's evidence was that he had signed whatever documents he was asked to, but did not pay any particular attention to them. The company was VAT registered because some production companies required Mr Milligan to purchase costumes and equipment and invoice them for the cost; this took the business turnover above the VAT threshold. The company was dissolved because the engagers with whom Mr Milligan worked ceased to require self-employed workers to use a company structure. Mr Milligan and his wife considered that it was not worth the cost and administrative burden to maintain the company.

23. Following the dissolution of the company, Mr Milligan did not engage another accountant for a number of years as he did not consider that he needed one. It was not until March 2009 when an engager required him to work through a personal service company, so that Mr Milligan needed to set up another company, that he once again engaged an accountant.

24. The accountants' evidence was that they had been engaged because Mr Milligan intended to start working through a company, and that he had advised them that he was self-employed and had been preparing his own accounts and tax returns. Following receipt of a copy self-assessment statement which showed that Mr Milligan had a tax debt, the accountants checked his personal tax position and in November 2009 advised Mr Milligan that he should have filed tax returns for the tax years in question and that he owed a substantial amount of tax and interest.

25. The accountants' evidence was that they advised Mr Milligan again in a meeting in 2011 that the returns needed to be brought up to date and that they had posted copies of HMRC correspondence, including penalty determinations, to Mr Milligan on a number of occasions to advise him to complete his tax returns as a matter of urgency.

26. The accountants were not present at the hearing to be cross-examined but their evidence was not seriously challenged. In his witness statement, Mr Milligan's evidence was that he accepted their advice that he needed to bring his tax affairs up to date, although he suggested in the hearing that the accountants should have told him that he needed to complete a tax return for 2008/09 in particular as he had appointed them in March 2009. We prefer the evidence of the accountants and consider that this suggestion indicates that Mr Milligan's recollection of events has perhaps been coloured by what he subsequently wished had happened rather than what actually happened.

Postal issues

27. In his witness statement, Mr Milligan stated that he had not received any of the accountants' letters although, in an interview with HMRC in March 2012, he said that he had received at least one of the letters from the accountants asking him to bring his tax affairs up to date. On the balance of probabilities, we consider that the statement in interview is more likely to be correct.

28. Mr Milligan said that there had been difficulty with postal deliveries to the family home after they moved in 2004, as the house was in a remote location. Post was left at a bin on a neighbouring farm and Mr Milligan's children would check for post on their way home from the school bus.

29. Correspondence from the bank, in particular, was found to be missing; it later transpired that the address on the bank account had been changed to that of a neighbouring property. Mr Milligan's evidence was, however, that he often left official or financial letters unopened as there was "always something more urgent to deal with". He had not wanted to pass the burden on to his wife.

30. Mr Milligan's evidence as to postal issues was not challenged to any particular extent and we find as a fact that there were difficulties with the post. For reasons set out elsewhere in this decision, we find also that Mr Milligan received relevant correspondence and that any postal issues did not prevent him from receiving correspondence from his accountants and HMRC.

Family matters

31. Mr Milligan contended that he had been under severe personal pressure in the tax years in question, as he worked very long hours: with the commute from home, it was not unusual for him to work 15 hours days. At the same time, one of his children required significant hospital treatment and Mr Milligan's wife would accompany him for this, requiring Mr Milligan to look after their other children, occasionally with family assistance. His wife also suffered from ill health for a number of years which also meant that Mr Milligan had to undertake more of the family responsibilities.

32. Mr Milligan also explained that, for a number of years, the family had to contend with disruption as they worked to convert a derelict barn into what became the family home. During that time they had difficulties with planning, and lived in rented accommodation until enough of the conversion project had been completed to allow them to move into the property.

33. As a result of all of these issues, Mr Milligan stated that he became stressed and depressed, which was exacerbated by losing the regular income from a substantial role in 2005; he did not find it easy to seek help but was eventually diagnosed with clinical depression in 2013.

34. None of this was disputed.

HMRC investigation

35. HMRC attempted to contact Mr Milligan on a number of occasions between March 2004 and February 2009, by telephone (to a variety of numbers) and post, with reminders as to outstanding returns, the issue of penalties, and related correspondence. HMRC stated that he did not respond to any of these enquiries. Messages had been left on voice mail and answer phones, but no response had been received. Mr Milligan suggested that he might not have received these messages but, considering the detailed evidence provided, we find that HMRC did attempt to contact him during these tax years.

36. In July 2011, as part of a task force looking at particular non-compliance, HMRC identified that Mr Milligan had not submitted his 2009/10 self-assessment tax return. Further investigation showed that Mr Milligan had been working on a self-employed basis, that tax had not been deducted from his earnings at source under PAYE and he had not accounted for the tax through his returns. HMRC treated this as a criminal investigation and in February 2012 arrested Mr Milligan and, having obtained a warrant, searched his home. When interviewed under caution, Mr Milligan accepted that he was self-employed and that he should have declared and paid tax; he stated that he had been too busy to deal with his tax affairs due to pressure of work and family difficulties. At a further interview in May 2012, Mr Milligan stated he had not considered the implications of not paying tax and national insurance; it had simply slipped his mind.

37. A search of Mr Milligan's home in February 2012 found unopened post from HMRC with self-assessment forms for 2007/08 and 2008/09, together with contracts and pay advice relating to his work. A statement of liabilities from HMRC, issued in April 2011, was also found; this correspondence had been opened.

38. HMRC also obtained information from companies which had engaged Mr Milligan, as well as the accountants whom he had appointed in 2009. The evidence from the engagers and accountants is summarised above.

39. The assessments were issued when Mr Milligan failed to make payments under a settlement agreement which had disposed of the criminal proceedings against him.

Mr Milligan's submissions (in summary)

40. Mr Milligan contended that he had not been deliberately dishonest and had not been trying to defraud HMRC by failing to submit returns. He stated that he had been under significant pressure in his family and work life in the years in question, and he had assumed that tax and national insurance contributions were being deducted from the payments which he received.

41. Mr Milligan accepted that he had been careless, and that he had neglected his financial affairs because of personal and professional pressures but he had not taken any steps to conceal income and stated in his witness statement in support of this that he had appointed accountants to put his tax affairs in order in 2009.

HMRC submissions (in summary)

42. HMRC contended that Mr Milligan accepted in interviews that he was under an obligation to file tax returns and did not do so, despite receiving notices under s8 TMA 1970 to file returns. He did not respond to attempts by HMRC to contact him over a number of years. He signed contracts which clearly stated that he was responsible for dealing with income tax and national insurance contributions in respect of payments made to him. HMRC submitted that, in the alternative and at a minimum, that Mr Milligan chose not to take any steps to ascertain the correct position because he did not want to receive confirmation that he needed to file returns and deal with his tax affairs personally.

43. HMRC submitted that Mr Milligan's behaviour was therefore deliberate. The fact that he was, as he accepted, disorganised and had personal and professional pressures did not have any bearing on this. HMRC contended that Mr Milligan knew that he was under an obligation to file tax returns and chose not to.

Discussion

44. For the reasons set out below, and having considered all of the evidence before us, we find that Mr Milligan's behaviour was deliberate. The Crown Court concluded (and we agreed) that his failures were not dishonest. However, as also set out below, there is no requirement that behaviour be dishonest for it to be deliberate.

45. The evidence of production heads and a payroll manager for the production companies for whom Mr Milligan worked in the relevant tax years was that their records showed that Mr Milligan was engaged on a self-employed basis throughout the periods under appeal. In interviews with HMRC, Mr Milligan initially agreed that he was self-employed although he later contended that he did not realise this during the tax periods under appeal, as he had not read the contracts and papers that would have alerted him to the fact, and had thought he was too junior to be taken on as self-employed. Mr Milligan's evidence was also that when he had first worked for one particular production, in October 2000, he had submitted invoices. The submission of invoices indicates that he believed he was self-employed at that time, as it is not consistent with employment. Although he was advised that he did not need to submit invoices, there was nothing to indicate that this was because he was told that he was employed. A simple review of his payment advice from his engagers would also have shown that no tax was being deducted, but Mr Milligan stated, and we find, that he did not pay any attention to the payment advice received or other documents which would have shown that he needed to deal with tax matters in respect of payments received.

46. Mr Milligan also contended that he had postal difficulties, although his evidence was that these related primarily to his bank. Any such problems would not explain the entire period under appeal, as the family did not move to the address which had postal problems until 2004. From the search of his home, it is clear that Mr Milligan received (but did not open) tax returns for 2007/08 and 2008/09 and other correspondence from HMRC.

47. We have taken into account the difficulties faced by Mr Milligan in his personal life but we also note that Mr Milligan was quite capable of dealing with financial matters when required to do so: he gave clear evidence regarding 'float' money for expenses that he received from his engager, stating that he kept this money in a separate account and that he dealt with the administrative aspects on a timely basis, apparently because the engager required him to account for the funds spent in detail and provide receipts. However, with correspondence from HMRC, his evidence was that he put it to one side to deal with later but never got around to dealing with it because he had other things to deal with.

48. Considering all of the evidence, we find that Mr Milligan effectively adopted a "head in sand" approach to his tax affairs and ignored them. Even after his accountant told him that he needed to file his returns and bring his tax affairs up to date, he failed even to file the tax return for the tax year in which he was so advised let alone deal with earlier returns.

49. Case law has established that deliberate behaviour does not require an intention to act dishonestly. For example, in the decision in CF Booth Ltd [2022] UKUT 217 (TCC), the Upper Tribunal noted that (at 41]):

"There is in our judgment no requirement for HMRC to plead or prove dishonesty when seeking to impose a penalty for deliberate inaccuracy ... deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with a document that contains an error with the intention that HMRC should rely upon it as an accurate document."

50. Clearly, in this case Mr Milligan has not provided HMRC with an inaccurate document but we consider that the key point in CF Booth Ltd is that behaviour does not have to be intended to be dishonest for it to be deliberate.

51. Further, as set out in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1, deliberate behaviour also does not require detailed knowledge but can include 'blind-eye knowledge' where an individual chooses not to find out the correct position, although knowing that they should do so.

52. We consider that even if Mr Milligan did not precisely know what he needed to do with respect to his tax affairs in the tax years in question, despite having previously filed tax returns, Mr Milligan "head in sand" approach meant that he chose to ignore his tax obligations in circumstances where we consider that he at least knew that he should have taken steps to find out what the correct position was with regard to his tax affairs.

53. That was not merely carelessness. We find that it was a deliberate (but not dishonest) choice not to engage with his tax responsibilities and, instead, prioritise other issues in his life. We find that the behaviour which led to the loss of tax was, therefore, deliberate.

54. Given that we find that the behaviour which led to the loss of tax was deliberate, we find that the assessments for the tax years 2000/01 to 2006/07 were raised within twenty years of the end of the relevant tax years and so were validly raised. We have already concluded as noted above that the assessments for 2007/08 and 2008/09 were also validly raised.

Amount of the assessments

55. We turn therefore to consider the amount of the assessments. The burden of proof is on Mr Milligan to show that the amounts assessed by HMRC are incorrect and, also, to show what the correct amount should be.

56. The evidence from HMRC was that the quantum of the assessments was established from a schedule of payments identified during the investigation into Mr Milligan's tax affairs. Given his rather limited records, HMRC had allowed an expenses deduction of 17.05%. This had been calculated from VAT returns previously submitted by Mr Milligan's company.

57. Mr Milligan provided a witness statement from an accountant who had acted for his business from 2012. The statement commented on the assessments issued by HMRC and in particular contended that:

(1) the 17.05% allowed by HMRC for deductions was not a fair reflection of the expenses deductible for income tax as it was based on VAT deductions. Some expenses, such as payroll and road fund costs, would not be reflected in VAT returns. Capital expenditure is also dealt with differently for income tax purposes;

(2) it was not appropriate to apply a pattern of events between 2009 and 2011 to activities taking place up to a decade earlier, although he accepted that in the absence of any records, this would be the 'least worst' approach available;

(3) basing deductions on a percentage of turnover did not account for the fact that businesses have fixed costs which do not vary with the level of activity such as premises costs, fixed costs relating to vehicles and similar.

58. The witness statement set out an alternative calculation based on the accounts for the more recent companies used by Mr Milligan and his wife for the business. As a result of the calculation, it was contended that Mr Milligan's business would have had fixed overheads of £2,662 per year and further costs averaging 29.4% of turnover.

59. Officer Bailey, in the hearing, stated that she found the calculation difficult to accept as accurate. For example, it included significant costs for consumables but Mr Milligan's evidence had been that, in the tax years under appeal, the production companies had paid for these directly. Other expenses, such as motor costs and telephone costs, also varied considerably from year to year: there were no motor costs in the first year of analysis and the telephone costs in the second year were significantly more than in other years. The calculation included the costs of an accountant, but there was no evidence that Mr Milligan had used an accountant in the years in question. Similarly, there were deductions for payroll costs although there was no evidence that Mr Milligan had had any employees in the tax years in question.

60. HMRC submitted that, if the amounts included in the calculation for Mr Milligan were corrected to remove the amounts for consumables, telephone costs, accountancy costs and motor expenses, the remaining expenses amounted to approximately 10% of income. HMRC had allowed a deduction of 17.05% of income and submitted that this was a fair and reasonable estimate.

61. The accountant was not present at the hearing to be cross-examined. On balance, we find that his witness statement and calculation is not sufficient to displace HMRC's assessments. Whilst neither his calculation nor that of HMRC is based on any contemporaneous records, there are clear inaccuracies in the accountant's proposed calculation (particularly the inclusion of consumables, accountancy costs, payroll costs) which mean that we do not consider that the calculation satisfies the burden of proof on Mr Milligan to displace the amounts assessed by HMRC.

62. As we have found that the assessments were all validly raised, and that Mr Milligan has not met the burden of proof on him to displace the amounts assessed, the assessments are upheld in full.

Penalties

63. As the relevant failures all took place before the 2010/11 tax year, the penalty was issued under the provisions of s93 TMA 1970, which continues to apply to those tax years (Art.20, SI 2001/702). S93 TMA 1970 states (as relevant):

(1) This section applies where—

(a) any person (the taxpayer) has been required by a notice served under or for the purposes of section 8 or 8A of this Act to deliver any return, and

(b) he fails to comply with the notice.

(2) The taxpayer shall be liable to a penalty which shall be £100.

(3) If, on an application made to it by an officer of the Board, the tribunal so directs, the taxpayer shall be liable to a further penalty or penalties not exceeding £60 for each day on which the failure continues after the day on which he is notified of the direction (but excluding any day for which a penalty under this subsection has already been imposed).

(4) If—

(a) the failure by the taxpayer to comply with the notice continues after the end of the period of six months beginning with the filing date, and

(b) no application is made under subsection (3) above before the end of that period, the taxpayer shall be liable to a further penalty which shall be £100.

(5) Without prejudice to any penalties under subsections (2) to (4) above, if—

(a) the failure by the taxpayer to comply with the notice continues after the anniversary of the filing date, and

(b) there would have been a liability to tax shown in the return,

the taxpayer shall be liable to a penalty of an amount not exceeding the liability to tax which would have been so shown.

(6) No penalty shall be imposed under subsection (3) above in respect of a failure at any time after the failure has been remedied.

(7) If the taxpayer proves that the liability to tax shown in the return would not have exceeded a particular amount, the penalty under subsection (2) above, together with any penalty under subsection (4) above, shall not exceed that amount.

(8) On an appeal against the determination under section 100 of this Act of a penalty under subsection (2) or (4) above that is notified to the tribunal, neither section 50(6) to (8) nor section 100B(2) of this Act shall apply but the tribunal may—

(a) if it appears that, throughout the period of default, the taxpayer had a reasonable excuse for not delivering the return, set the determination aside; or

(b) if it does not so appear, confirm the determination.

(9) References in this section to a liability to tax which would have been shown in the return are references to an amount which, if a proper return had been delivered on the filing date, would have been payable by the taxpayer under section 59B of this Act for the year of assessment.

Penalty assessment

64. HMRC issued a penalty assessment for the failure to file tax returns for the tax years under appeal on 22 November 2016. It was submitted that the penalty was issued on time, as the returns have not been filed and the amount of tax on which the penalty is based has yet to be determined. This was not challenged and we conclude that the penalty was issued on time.

Whether reasonable excuse exists

65. A penalty can be set aside if the taxpayer has a reasonable excuse for the failure, and the reasonable excuse continues throughout the period of default.

66. HMRC contended that Mr Milligan had not established that there had been any reasonable excuse for the failure to file his returns. Even if there had been a reasonable excuse, HMRC contended that the reasonable excuse had ceased without the failure being remedied.

67. Mr Milligan contended that he had a reasonable excuse for the same reasons given above as to why he considered that his behaviour was not deliberate: in summary, that he had substantial personal and professional obligations that meant that he was unable to deal with his tax affairs in a timely manner.

68. Although neither party referred to it, we have followed the approach set out by the Upper Tribunal in Christine Perrin [2018] UKUT 56 (at [81]) in considering whether Mr Milligan had a reasonable excuse for the failure to file his tax returns:

"(1) First, establish what facts the taxpayer asserts give rise to a reasonable excuse (this may include the belief, acts or omissions of the taxpayer or any other person, the taxpayer's own experience or relevant attributes, the situation of the taxpayer at any relevant time and any other relevant external facts).

(2) Second, decide which of those facts are proven.

(3) Third, decide whether, viewed objectively, those proven facts do indeed amount to an objectively reasonable excuse for the default and the time when that objectively reasonable excuse ceased. In doing so, the Tribunal should take into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times. It might assist the Tribunal, in this context, to ask itself the question "was what the taxpayer did (or omitted to do or believed) objectively reasonable for this taxpayer in those circumstances?

(4) Fourth, having decided when any reasonable excuse ceased, decide whether the taxpayer remedied the failure without unreasonable delay after that time (unless, exceptionally, the failure was remedied before the reasonable excuse ceased). In doing so, the FTT should again decide the matter objectively, but taking into account the experience and other relevant attributes of the taxpayer and the situation in which the taxpayer found himself at the relevant time or times."

69. We have set out in our discussion of the question of whether Mr Milligan's behaviour was deliberate the facts asserted by him and, in general, we consider that Mr Milligan has largely established those facts.

70. However, we do not consider that the facts amount to an objectively reasonable excuse for the default: whilst Mr Milligan undoubtedly had significant personal and professional pressures on him, he was also able to deal with administrative matters in his professional life. He had previously engaged an accountant to deal with his tax affairs (and did so subsequently). We consider that it would have been objectively reasonable for a taxpayer in his circumstances to ensure that his tax obligations were ascertained and complied with for the tax years in question.

71. Even if Mr Milligan could have established a reasonable excuse, we consider that any such reasonable excuse ceased when he was advised by his accountants in 2009 that he needed to bring his tax affairs up to date. The failures were not remedied at all, let alone without unreasonable delay, after this point in time. As any reasonable excuse would not have continued throughout the period of default, it is not open to us to set the penalty aside.

Amount of the penalty

72. Given the length of the period of default, the penalty is calculated by reference to the tax liability assessed. HMRC evidence was that, in calculating the penalty, they allowed an abatement of 40% in total. This consisted of:

(1) 10% (out of 20%) allowed for disclosure: Mr Milligan had not contested the receipt of untaxed income but little detail had been provided afterwards.

(2) 15% (out of 40%) allowed for co-operation: although Mr Milligan had made a partial disclosure in interview, no further material had been provided to enable HMRC to review or revise the amounts assessed.

(3) 15% (out of 40%) allowed for seriousness: Although the courts concluded that the failure was not fraudulent, the failure persisted over a number of tax years despite prompting from HMRC and later accountants, and despite the specific wording of contracts entered into by Mr Milligan which made it clear he was responsible for dealing with the tax implications of payments received.

73. There were no particular representations made with regard to the amount of the penalty. We have reviewed the mitigation given and do not consider that there is any reason to amend it.

74. As we have concluded that there was no reasonable excuse and consider that the quantum of the penalty is appropriate, the penalty is upheld in full.

Conclusion

75. For the reasons set out above, we find that the assessments and penalty are upheld in full. The appeal is dismissed.

Right to apply for permission to appeal

76. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to "Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)" which accompanies and forms part of this decision notice.

Release date: 01^st MAY 2025

First-tier Tribunal (Tax)