A judge has warned taxpayers not to take advice from HM Revenue & Customs (HMRC) helplines or online guidance in a surprising ruling.
In the case of Karen Rotberg v HMRC, the judge indicated that the tax man’s advice was not to be relied on and reinforced other recent cases that confirmed manuals, leaflets and help lines have no force in law.
The decision has cost Mrs Rotberg not only a fortune in legal fees, but a massive tax bill as her accountant gave her advice about the disposal of shares worth almost £4.3 million in web sites Jobsite and Auto Online after calling a HMRC for advice.
The First Tier Tribunal heard the accountant called a HMRC tax inspector who confused Enterprise Investment Scheme (EIS) deferral relief with roll-over relief.
Had Mrs Rotberg claimed deferral relief, she would have minimised a considerable capital gains tax bill, but because of the mix-up between her accountant and HMRC, she missed making the claim and faces settling the bill.
The tribunal argued the HMRC official was not to blame.
“This was a brief and general conversation about capital gains tax reliefs which the tax inspector could not have regard as a definitive ruling,” said the tribunal.
“The accountant is at fault here for relying on such a telephone call and not properly checking legislation himself. If he did not know the answer, he should have referred the case to an accountant who did.”
The tribunal then branded the accountant as negligent.
What does this ruling mean to landlords?
- Do not rely on the advice of an HMRC helpline, tax inspector or publication unless it is in writing and clearly states that the content is a considered opinion
- Check out your accountant – letters after the name are no guarantee that they know what they are talking about when discussing the finer points of tax law
- Get a second opinion if significant amounts of tax are involved