This was demonstrated in the First-Tier Tax Tribunal case of Bekoe v HMRC. Thankfully the courts and tribunals have not always agreed this approach and therefore even if HMRC refuse to accept a taxpayer’s account of previously unexplained bank receipts, the department cannot rely on the tax tribunal agreeing with them. The situation will be presumed to go on until there is some change in the situation, the onus of proof which is clearly upon the taxpayer.” “Once the Inspector comes to the conclusion that, on the facts which he has discovered, has additional income beyond that which he has so far declared to the Inspector, then the usual presumption of continuity will apply. This principle was established following the 1973 case of Jonas v Bamford, in which the judge stated: It doesn’t end there however, because the Revenue may assume that similar errors occurred in other tax years based on the ‘presumption of continuity’. ![]() So, what might have been a gift or a loan from a family member or friend but was forgotten about during the passage of time, could cost the poor old taxpayer a fair amount of money in back tax, interest and even penalties. Where bank receipts that have not been declared on the tax return because they were non-taxable in the first place but have not been properly substantiated as such, then HMRC will seek to tax that income on the basis that it is undeclared business income. an account used for both business and private purposes, or even a personal account, then this can cause a major headache when HMRC start to poke their nose into the tax affairs of the business. If this has been paid into a ‘mixed’ account, i.e. ![]() Inevitably however, human error can cause the odd unidentified bank receipt to be overlooked. Unidentified bank receipts can spell troubleįor business owners, it is important that they can identify and record every bank deposit where possible.
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