Sometimes a case goes before the First-tier Tribunal that really drives home just how important it is to keep on top of your tax and showcases that it’s probably best to engage with a qualified professional when dealing with any returns or accounts.
A taxpayer worked as a self-employed milkman for seven months during the 2003-04 tax year and subsequently filed a self-assessment return, and this is where the issue lay. He put the decimal point in the wrong place.
If a self-employed milkman made sales of over £5,650,000 in the space of seven months you’d be a touch suspect, as were HMRC as they corrected the error and assessed his return on profits of £54,502. That still looks like a lot, because it is. He had failed to claim expenses – namely all costs relating to stock and the running expenses of his milk float.
Then the taxpayer put his head in the sand.
Ultimately, the Tribunal decided that nothing else could be done according to the law. The taxpayer must be taxed on his profits. He now owes more than £16,000 in tax and National Insurance payments, nearly £2,000 of penalties, and 13 years of interest on his profit. Which he didn’t earn.
It would’ve helped him to engage with an accountant who likes tax. Someone who wouldn’t have let it get that far.