A QC fined more than £1m for the late payment of both income and inheritance tax (IHT) over several years has had the sanction reduced by 80% in the Court of Appeal.
Romie Tager QC, a member and former head of Selborne Chambers, still has to pay £220,000 in penalties, more than the tax he owed, after his conduct was heavily criticised by the court.
Lord Justice Henderson recounted how the commercial and property silk “failed over a period of several years to comply with many of his most basic obligations as a taxpayer, not only in relation to his personal tax affairs, but also in relation to the estate of his late father”, who died intestate on 26 March 2005 and for whom Mr Tager acted as de facto administrator.
He provided an IHT account of the estate in 2009, three years late, and was routinely late in filing his income tax returns. But he also made substantial payments on account which were intended to be, and usually were, sufficient to cover his outstanding liabilities.
Mr Tager repeatedly failed to respond to enquiries from HM Revenue & Customs (HMRC) about his failures and then information notices it subsequently served on him. Henderson LJ described the prolonged non-compliance as “inexcusable”.
Eventually, HMRC applied to the Upper Tribunal to impose an additional penalty to the fixed penalties that Mr Tager had accumulated, using for the first time a power introduced in schedule 36 of the Finance Act 2008.
In 2015, the tribunal imposed penalties totalling £1.25m, a sum later reduced to £1.08m following the correction of some errors. Mr Tager appealed.
Henderson LJ, giving the unanimous decision of the Court of Appeal, stressed that this provision was penal, and was reserved for serious cases of non-compliance with information notices, “typically where imposition of an initial fixed penalty of £300 and continuing daily penalties at the relatively modest rate of up to £60 per day have failed to secure compliance”.
But he found that the Upper Tribunal had drawn a flawed analogy with another provision on late filing that dealt with deliberate concealment.
This indicated dishonesty, and while Mr Tager’s conduct had been “grossly, or even recklessly, negligent”, it had not been dishonest.
The court also found that the tribunal had worked off incorrect figures; the unpaid tax (ignoring interest) was agreed before the court to have been income tax of £1,250, in respect of the tax year 2009/10, and IHT of £195,471, which should have been accounted for on 1 April 2006.
Henderson LJ said it was not “always necessary to show a demonstrable link between the tax unpaid and the penalty imposed”, especially given the wider circumstances of this case.
“The lamentable history which I have related would be wholly unacceptable from any taxpayer, let alone a leading and successful barrister. Mr Tager fully deserves all the harsh things said about him by the judge.”
He decided to impose a £20,000 penalty for Mr Tager’s failure to comply with the income tax notices and £200,000 “for his much more serious failures to comply with the IHT notice”.