Tax liability and criminal confiscation

In two recent cases Martin v HMRC [2012] UKFTT 304 (TC) and Nugent v HMRC [2012] UKFTT 329 (TC) taxpayers advanced an argument that their tax liabilities were extinguished following payment of a confiscation order quantified by reference to benefit received from undeclared criminal income. Both cases came before the First-tier Tribunal sitting in Belfast with Judge Ian Huddleston presiding. The issues in Martin v HMRC are particularly interesting. As well as discussing the circumstances in which discovery assessments can be made under TMA 1970 s 29 the Tribunal was required to consider the effect of a confiscation order which had been calculated by reference to the ‘criminal lifestyle’ provisions under POCA 2002. HMRC raised discovery assessments approximately six months after a confiscation order had been made against the taxpayer...