Tax Tribunal Shows Mercy to Negligent but Honest Publican

The First-Tier Tribunal has come to the aid of a negligent, but fundamentally honest, publican who failed to deduct PAYE from sums paid to part-time bar staff in the belief that their earnings fell well below the taxable income threshold. In overturning £8,000 in penalties and greatly reducing the publican’s assessed liability, the tribunal noted that it would be ‘an absolute travesty’ to force him into bankruptcy.

In what the tribunal described as ‘a sad case’, the publican had been ignorant of his obligation to complete tax forms P46 and P38S when employing part time staff, mainly students, who had no P45s to illustrate their past earnings. Following an inquiry by Her Majesty’s Revenue and Customs (HMRC), the publican was hit with penalties totalling £8,000 and a tax assessment of more than £35,000, although this was subsequently reduced to approximately £30,000 after a review.

Reducing the tax assessment to approximately £3,000 and overturning the penalties, the tribunal found that the publican was an honest witness and accepted his account in its entirety. It found that the ‘plain reality’ was that most, if not all, of the part-time workers would have fallen below the taxable income threshold.

Although the tribunal acknowledged that the publican had been negligent, it found that he did have a reasonable excuse for late filing of end of year returns in that he had been acting on his accountant’s advice. Paying tribute to the tax authorities’ conduct of the case, the tribunal concluded: “It was extremely encouraging to see HMRC being realistic and not wishing to inflict pain and bankruptcy on an honest taxpayer”.

CIOs – New Registrations Being Accepted

The Charity Commission is now accepting new applications or registration from existing unincorporated charities with annual incomes over £250,000 who are setting up a Charitable Incorporated Organisation  (CIO) and transferring assets into it.

The Charity Commission website provides guidance on registration as a CIO.

Presumption of Death Now Law

Anyone who has ever had to deal with the affairs of a person who goes missing and is never seen again will welcome the passing of the Presumption of Death Act, which was passed into law on 26 March 2013.

The complexity and red tape associated with gaining control over the affairs of a missing person has until now caused significant problems for their family.  Now, the relatives of a missing person will be able to obtain a certificate of presumption of death after the missing person has 'not been known to be alive' for seven years.

Court Writes Statutory Will for Wealthy Dementia Sufferer

In a rare move, the High Court has stepped in to write a statutory will for a wealthy dementia sufferer (F) to ensure a fair division of his assets between his family and loved ones upon his death.  As all parties agreed that F, aged in his seventies, had not executed a valid will and lacked legal capacity to do so, the court analysed his likely intentions and made a series of bequests under the Mental Capacity Act 2005.

From a working class background, F had built up a substantial fortune through canny property investments.  His estate had been tentatively valued at more than £3 million before inheritance tax.  Secretive by nature, he never married but had a long-term relationship with a woman by whom he had a son (K) (his paternity having been proved by DNA testing).

His advanced dementia meant that he had no recall of the extent of his assets or family relationships and could not retain information for long enough to weigh up decisions.  He was devotedly cared for by a woman (N) with whom he had lived for almost 25 years.  His mother, with whom he had a close relationship and who was aged in her nineties, was resident in a nursing home.

The court accepted arguments that it was not in F’s best interests for him to die intestate and, in making a statutory will, took into account evidence of his past and present wishes and feelings and the beliefs and values that would have been likely to influence his decision if he had had capacity.

The court directed that:[bulletlist]

  • 35% of F’s estate should go to N in recognition of the length of their relationship and the extensive care that she had given him;

  • 43% should go to K;

  • the remaining 22% should be be split between F’s three siblings and an uncle to whom he was close; and

  • an immediate gift of £50,000 should be made to F’s mother to assist with the costs of her care[/bulletlist]

New Guidance for Managing Bank Accounts Published

New guidance has been published to help people wanting to manage a bank account for someone else.  The guidance, which can be downloaded here, aims to give carers and relatives a better and more consistent experience when dealing with banks and building societies, hopefully reducing their burden at what can be a very difficult time.