Henry Rafferty v The Commissioners for HMRC
Decision date: 9 May 2022
Neutral citation: [2022] UKFTT 161 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerns HMRC assessments and penalties arising from unexplained bank lodgements and the outright purchase of a house by Mr Henry Rafferty in 2015. The First‑tier Tribunal found Mr Rafferty failed to prove, on the balance of probabilities, the factual sources of the capital claimed (inheritances, benefits and family contributions) with adequate documentary evidence, and therefore upheld HMRC’s closure notice, discovery assessments for multiple years and the related penalties including a £300 Schedule 36 penalty. All of Mr Rafferty’s appeals were dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The Tribunal applied and recorded that where HMRC assesses unexplained accumulations, the taxpayer bears the onus of proving the factual source of the wealth on the balance of probabilities and must support explanations with credible documentary evidence; absent such satisfactory documentary explanation for bank lodgements and capital used to buy property, HMRC’s assessments and related penalties may be upheld.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: high
The Tribunal observed (non‑decisively) that someone saving to purchase property would normally produce an audit trail (for example, dedicated savings accounts), and the absence of such records undermined a saving explanation. The Tribunal also commented on practical hearing delays (including COVID‑related restrictions) and its use of directions for written submissions, noting this did not affect substantive findings.