Gardiner: negligence and tax avoidance

Sometimes tax schemes are found by the courts to fail. The question then arises whether a participant, who in the meantime filed a return on the basis that it worked, is guilty of negligence.

Certainly the possibility cannot be ruled out, as Mr and (the then) Mrs Litman found out in [2014] UKFTT 089(TC). The question is generally not whether a participant knew or ought to have known the fine technical details of the scheme, but whether he or she asked appropriate questions before signing a return. You don’t need to be a tax expert to know whether the meetings you say you attended actually happened, or whether a loan on which the scheme depends was actually made; or whether the asset you claim to have bought and sold actually existed; or at least to evince some sort of curiosity into such matters. Blindly signing all the papers put in front of you does not reach the standard of care the law expects of you. So much is fairly uncontroversial.

But where negligence is alleged, it is for HMRC to prove their case: in technical terms the “burden of proof” lies with HMRC. It is not for a taxpayer to show he is not negligent, but for HMRC to show that he is.

Unfortunately for them, HMRC seemed to forget this basic point in the recent case of Gardiner [2014] UKFTT 421 (TC). HMRC called no witnesses and in their absence were unable to produce in evidence any of the documents on which they apparently sought to rely. There was therefore not even a prima facie case of negligence for the taxpayers to answer, so – case dismissed.

Result: If the taxpayers had in fact been guilty of negligence (a matter which, we emphasise, remains unproven), HMRC’s handling of the case will have allowed them to “get away with it”. Possibly worse, if they were not guilty of negligence, their time and money has been wasted in coming to court to resist an allegation entirely unsupported by evidence. Either way, there should be some very red faces at HMRC.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


By submitting this form, the data provided will be used to perform your request according to our privacy policy.