Joanne Lunn and Vanilla Monsoon Ltd v The Commissioners for HMRC
Decision date: 6 June 2024
Neutral citation: [2024] UKFTT 509 (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
The Tribunal dismissed linked appeals by Joanne Lunn and her company Vanilla Monsoon Ltd against HMRC discovery assessments and penalties for several tax years/periods. It found on the balance of probabilities that expense increases and inter-company allocations were fabricated by the preparer Christopher Lunn/CLAC and that Ms Lunn’s claimed sole trade was not genuine, so the discovery assessments (including extended-time assessments where loss was deliberate) and the penalties were valid and upheld.
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: medium
The judgment indicates that where a taxpayer’s agent deliberately introduces inaccuracies into returns or accounts, HMRC may validly raise discovery assessments and rely on extended time limits; further, manuscript increases to expense figures and arbitrary inter-entity allocations unsupported by contemporaneous evidence can be treated as artificial and disallowed.
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: medium
The Tribunal observed that general assertions about the commonality or acceptability of similar tax structures are unpersuasive without evidence specific to the taxpayer, and that claims of licensing personal IP to a wholly owned company require formalisation (eg licence agreements, valuation and allocation methodology) to be persuasive.