Accountancy firm client wins HMRC court case

22 September 2024, 16:27 BST

A man who was ordered to repay thousands of pounds after being involved in a tax rebate scheme has successfully won his case against HM Revenue and Customs (HMRC).

A judge ruled that HMRC had not followed the correct procedures when attempting to recover payments made to Julian Lowe.

Mr. Lowe had used the services of Apostle Accounting, a Suffolk-based company, to claim back money on tax-deductible expenses. However, HMRC later stated that he was not eligible for these rebates.

In response, HMRC said it is "reviewing the case to learn lessons for the future."

Hundreds of Apostle Accounting’s former clients have received letters from HMRC demanding repayments for similar claims, with some demands reaching tens of thousands of pounds. This has led to widespread criticism and intervention from Members of Parliament advocating for those affected.

Apostle Accounting, based in Stowmarket, is currently being wound up and is under investigation by the police.

Mr. Lowe and his legal representative did not provide a comment when approached.

In February 2023, HMRC informed Mr. Lowe, who works in the water industry, that they were launching an inquiry into his tax returns.

‘Carelessly Inaccurate Claims for Deductible Expenses’

The judgement noted that HMRC believed Apostle had made "carelessly inaccurate claims for deductible expenses" and that no supporting documentation had been presented to verify these claims.

Mr. Lowe was subsequently informed that he owed more than £12,000. He appealed the decision to the First-tier Tribunal (Tax Chamber), which recently delivered its verdict.

Judge Nigel Popplewell ruled that HMRC had based their assessments on the absence of evidence for the expense claims. However, he found that HMRC had made no effort to request or obtain this evidence, leading to the judge’s decision to uphold Mr. Lowe’s appeal.

'No legal precedent' Word had spread in workplaces about Apostle's promises to help individuals claim tax relief for work-related expenses.

A former Apostle client, who has been compiling a list of those affected, estimates that over 800 individuals are involved.

Apostle submitted claims on behalf of these clients, leading to substantial tax rebates. However, HMRC later contacted these individuals, stating that they were not entitled to the refunds and demanded the money be returned.

Joanne Walker, a technical officer for the Low Incomes Tax Reform Group, pointed out that this tribunal ruling does not automatically apply to other Apostle clients.

"First-tier Tribunal cases are decided based on the individual facts and do not create legal precedents," she explained.

Ms. Walker added, "In a similar situation, HMRC could have properly documented their process, and the assessments might have been upheld."

Due to confidentiality, HMRC did not comment on specific cases. However, a spokesperson confirmed, "The tribunal's decision only applies to this specific case and does not affect other taxpayers."