Kenan Altunis v The Commissioners for HMRC
Decision date: 15 August 2023
Neutral citation: [2023] UKFTT 719 (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 Mr Altunis acted fraudulently or negligently in claiming £5,344,836.23 of losses for 2007–08 arising from the Alphabeta scheme and whether certain scheme payments/loan arrangements were fees or genuine. The Tribunal found HMRC did not prove fraud: Altunis believed he would be deemed a trader under the agency arrangement, but he was negligent for failing to obtain independent specialist advice before entering an aggressive loss-creation scheme. The Tribunal also found the £656,250 represented 12.5% of the maximum loss and at least partly a fee, that Alphabeta was marketed as a loss scheme, and that the Bayridge loan was not intended to be repaid. The penalty was reduced to £652,549 (31.5% of the relevant tax difference) after applying the Tribunal’s penalty discretions.
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
A taxpayer’s receipt of a protective/indemnifying side letter does not by itself establish that the taxpayer knowingly made a false representation in a return; however, participation in an aggressive, clearly marketed loss-creation scheme without obtaining independent specialist tax advice may amount to negligence for the purposes of a TMA s95 penalty.
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 indicated (obiter) that using behaviour-based guidance as a starting point for penalty quantification under its s100B discretion is appropriate even though s95 does not formally distinguish fraud and negligence; and that a sham is not a necessary element of all frauds, so fraud can exist without a sham but pleading must specify dishonesty or recklessness.