Michael Cohen v The Commissioners for HMRC
Decision date: 26 October 2026
Neutral citation: [2026] UKFTT 1486 (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 appeal concerned whether a £362,830 director’s loan account (DLA) written off on BEL’s liquidation was chargeable to income tax in 2020/21, whether HMRC’s closure notice amending Mr Cohen’s 2020/21 return was valid, and whether the penalty for omission was correctly categorised. The Tribunal found the DLA was written off in 2020/21 and chargeable income, upheld the closure notice so the amendment stands, but determined the omission was careless (not deliberate) and ordered the penalty to be re‑categorised and recalculated with appropriate mitigations.
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 contemporaneous evidence (including signed company accounts, a liquidator’s letter and statement of affairs, and a settlement agreement) establishes that a director’s loan was written off in a particular tax year, the written‑off amount is chargeable to income tax for that year and must be included in the taxpayer’s self‑assessment; an omission to include such an amount can amount to carelessness rather than deliberate conduct where the taxpayer relied on advisers, had difficulties understanding the position, and did not intentionally seek to mislead.
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 it would have been prudent for the taxpayer to instruct accountants specifically about tax consequences after the liquidation rather than relying on informal or prior advisers; it also noted that HMRC letters may be treated as received where they were sent and not returned, even if the taxpayer does not recall receipt.