UPDATE: THE UPPER TRIBUNAL HAS REFUSED PERMISSION TO APPEAL THIS DECISION – SEE THE CLARITAX NEWS STORY.
In the case of Neilson v HMRC [2025] UKFTT 868 (TC), the FTT has ruled that, following the failure of the “Working Wheels” tax avoidance scheme, it was not possible for the Appellant to use the corrective action form to remove a sum of £1,000,000 from the tax return (the amount had originally been disclosed as “other taxable income”, but the Appellant now maintained that this was a non-taxable gift, or that if it was taxable, the tax had already been paid by the donor). Furthermore, the FTT judged that HMRC’s conclusion in its closure notice that no amendment to the return was required, was not an appealable decision.
Despite judging that no amendment or appeal was possible, the FTT considered the nature of the receipt and concluded that the sum was correctly disclosed and was taxable.
INCOME TAX – whether corrective action form can be used to make further consequential amendments to a tax return – no – whether conclusion in closure notice that no amendment to a self-assessment return is required is appealable – no – appeal dismissed
Considering the matters raised, the FTT concluded that:
“As set out above, we find that:
(1) an amount of £1,000,000 was recorded as other taxable income in box 15 of Mr Neilson’s tax return;
(2) the handwritten amendments to the corrective action form did not amend Mr Neilson’s tax return to remove the amount of £1,000,000 from box 15 of the return;
(3) the closure notice did not amend box 15 of Mr Neilson’s tax return; and
(4) there is no scope for this Tribunal to consider whether or not Mr Neilson has been overcharged to tax by box 15 of his tax return.
As such, we find that Mr Neilson is taxable on the amount of £1,000,000 received.
Even if the return had been amended, we also find that the amount of £1,000,000 was received in connection with Mr Neilson’s business activities and is therefore taxable income.
We find that Mr Neilson’s tax liability is not reduced or discharged because a third party may have paid tax on the proceeds from which this payment was made, or because that third party may have agreed to be liable for tax on the amount.
The appeal is therefore dismissed.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2025/868
Related content from Claritax Books
In this book, the author examines the statutory rules and addresses the practicalities of the closure notice from the taxpayer’s point of view. In particular, the text examines how to obtain a notice and how to deal with it once it has been issued (including challenging the notice when appropriate).
