Theft of money from tills & recovered - when assessed?
My client had an employee between September 1995 and September 1998, when she was sacked for being found stealing money from the tills. Software was used to try and establish via gross profit margins expected from this trade to those achieved what the likely amount of money stolen was. It came to around £27,000 over the 3 years and she plead guilty in court to it.
The money will be received in tranches by my client and when the first one was received in 1999/2000, I notified the Inspector of Taxes, advising him of the situation and that the tranches would be carried back to the tax years 1995/96; 96/97; 97/98 and 98/99, when we knew the money was taken and effectively sales under-declared for these periods.
The Inspector insists that the money received should be assessed in the year of receipt, when my client is a higher rate taxpayer. Over the previous years when the theft took place he was a basic rate taxpayer. The Inspector says he knows of no legislation which would allow him to re-open earlier years. Can anyone help on this one as to what the correct treatment of it should be.
Duncan M Strachan