When is an assessment reasonable?

When is an assessment reasonable?

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I am familiar with cases in VAT law where the court / tribunal has said that assessments have to be reasonable, but I don't know of something similar in Income Tax law. A new client has been assessed, based purely on his bank statements. Basically, they have gone through, added up all the significant receipts and assessed that total.

They have ignored the question of whether the receipt was capital or income, whether it was simply for example the repayment of a loan, etc, etc. etc.

This is not the only basis on which we will challenge the assessments, but I wondered if it was already established that a certain amount of reasonable care has to be taken in the calculations.

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By petersaxton
10th Jul 2010 20:03

HMRC attitude

Your client should be able to point out the details of the transactions that are wrongly categorised as income and explain what expenses should be taken into account.

If your client hasn't produced accounts then I think it's reasonable for HMRC to treat every receipt as income unless proved otherwise.

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