Billionaire Matalan founder wins 84m tax appeal after HMRC runs out of time
HMRC allowed too much time to pass before issuing its assessment for 84m worth of unpaid tax, a tribunal concluded
HMRC has lost out on 84m in tax after the billionaire founder of Matalan convinced a court the tax office took too long to go after the money.
John Hargreaves, 75, who founded the retail chain in 1985, has won his battle against the taxman relating to his tax return filed in 2002.
The dispute related to his sale of around 230m of shares in Matalan in May 2000. A few months before the sale, in March, Mr Hargeaves told HMRC he had moved to Monaco and was no longer a tax resident in the UK.
The taxman first opened an investigation into his affairs in 2004, after being alerted to the fact he was working for three days a week at the firms head office in Skelmersdale, but did not issue its charge for 84m in unpaid capital gains tax until 2007.
A tax tribunal, the papers of which were published last week, concluded this delay meant HMRCs assessment had gone stale and it cannot claim the tax.
Judge John Brooks said: There was, at the very least, more than three years between the discovery and the assessment. In my judgment, given this delay, the discovery had lost its quality of newness and become stale by the time the assessment was made. Accordingly the assessment cannot stand.
HMRC has the right to appeal the decision. A spokesman said: We are considering the judgment carefully.
Although Mr Hargreaves had moved to Monaco in March 2000 he first lived in a luxury hotel before settling in a rented property after a brief spell living on-board his yacht. He continued to work in the UK.
HMRC opened an inquiry in January 2004 after media coverage of Mr Hargreaves working arrangements.
In January 2007 it issued him with a discovery assessment for 84m in unpaid capital gains tax on the sale of the shares. Mr Hargreaves has been contesting this ever since on the grounds that he was not a British tax resident at the time and that HMRC had failed to follow the correct procedures.
The tribunal papers reveal that in September last year he withdrew the first part of the appeal accepting that he was resident in the relevant period. However, it found against HMRC on a procedural point.
The judge was critical of Mr Hargreaves for not seeking sufficiently detailed advice before filing his tax return but concluded that HMRC had let the clock run down on its inquiry.
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