Vitalie Milasenco v The Commissioners for HMRC
Decision date: 12 July 2023
Neutral citation: [2023] UKFTT 620 (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 appeal concerned HMRC discovery assessments and penalties for tax years 2013–14 to 2016–17, based on findings that the appellant traded online and failed to declare self‑employment income. The Tribunal found on the balance of probabilities that discovery conditions were met, upheld HMRC’s profit estimates and the closure notice, and concluded the appellant’s failure was deliberate (but not concealed), so penalties were properly imposed and reduced by 60% for disclosure. The appeal was dismissed and the assessments and penalties were 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
Where HMRC can establish evidence of sustained trading activity (for example marketplace feedback, substantial PayPal receipts and related bank transfers) the conditions for making discovery assessments under s29(1) TMA 1970 may be met, and estimates of unreported profits based on prior enquiry figures can be a reasonable basis for assessment when contemporaneous records are incomplete.
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 relying on lower, earlier-year profit figures in favour of the taxpayer can be a reasonable—and potentially generous—method of estimating profits in later years when records are lacking, and that personal circumstances such as medical condition or impending bankruptcy, without more, may not constitute special circumstances warranting further penalty reduction.