Taxpayers’ appeal against evasion shortfall penalties dismissed

Six appellants (four brothers and two brothers-in-law) appealed a Taxation and Charities Review Authority (Authority) decision upholding the Commissioner of Inland Revenue’s (Commissioner) assessments and imposition of evasion shortfall penalties. The appellants abandoned their appeal against the underlying income tax and Working for Families Tax Credits (WfFTC) reassessments, leaving only an appeal on whether the Commissioner had proved evasion for the purposes of s 141E.

The High Court held that the Commissioner had the onus of proving that in taking their respective tax positions, each appellant intentionally avoided the payment of income tax in circumstances where he knew he was or may be under an obligation to pay. The Judge upheld the Authority’s findings that the absence of records and implausible explanations given, meant that the evasion shortfall penalties were correctly imposed, and the appeal was dismissed.