What Happens If Your Tax Adviser Misleads You About Your Tax Return?

If your tax adviser misleads you about your tax return, then the taxpayer, having authorised the tax agent, is generally liable to HMRC. This rule applies provided the tax adviser is the authorised tax agent of the taxpayer.

Apostle Accounting Tax Rebate Case Leads To Discovery Assessment

In a recent case, Lucas v Revenue and Customs [2025] UKFTT 702 (TC) before the First-tier Tax Tribunal, Mr Lucas, a courier driver for UPS, appealed against HMRC’s discovery assessments totalling £3,576.60 for five tax years (2016/17 to 2020/21). The dispute was about expense claims submitted on his behalf by Apostle Accounting Ltd (“Apostle”).

The Background

Mr Lucas approved a single figure presented to him as the rebate due, which was provided with no breakdown by Apostle.

The Misstep

Without showing Mr Lucas the full tax returns, Apostle submitted returns for five years claiming travel and subsistence expenses (ranging from £3,500 to over £4,000). These claims were unsubstantiated, and HMRC later determined them to be unallowable.

HMRC’s Discovery and Assessments

HMRC opened an enquiry in February 2023 after reviewing the 2020/21 tax return. Conversations with Mr Lucas revealed he had no records to support the claims and wasn’t even aware the returns had been submitted. HMRC concluded that the loss of tax was due to the conduct of Apostle.

Judgment Highlights

The Tribunal accepted that Mr Lucas did not knowingly approve the tax returns but found that he did instruct Apostle to claim a rebate and approved the rebate figure. Therefore, Apostle was acting on his behalf when it submitted the returns, even if he didn’t understand the process.

Importantly, the Tribunal concluded that Apostle acted deliberately, not carelessly:

We have little doubt that Apostle acted deliberately in submitting tax returns containing the excessive and unallowable expense claims. Any competent tax agent would know that one cannot claim expenses in relation to meals. Apostle did not provide any rationale for the amounts claimed, nor did they appear to have any. The amounts varied randomly from year to year. We do not consider that this could have been a careless error in making the claim for Mr Lucas. Apostle’s response to Mr Lucas’ email following HMRC’s enquiry letter was factually inaccurate and threatening. This was not the response of a legitimate business which had made a mistake. Mr Lucas was not an isolated case. As mentioned, he only approached Apostle because many of his colleagues had been contacted by the company and offered help to claim “rebates”, for a very substantial fee amounting to 24% of the money received. Apostle was, in fact, conducting an industrial scale exercise. We understand that more than 800 people are affected and are having to repay the full amounts of the tax reclaimed by Apostle even though they only received 75% of it.

To the extent that it may be relevant, our finding that Apostle acted deliberately would also mean that the condition for making a discovery assessment in section 29(4) is satisfied.

As a person acting on behalf of Mr Lucas brought about the loss of tax deliberately, HMRC are entitled to issue discovery assessments for the tax years ended 5 April 2017 and 2018 in accordance with section 36.

…

We have a great deal of sympathy for Mr Lucas who was misled by Apostle into authorising claims which he believed to be legitimate, but which Apostle knew were not. However, we must apply the law as it stands.

The Outcome

The Tribunal dismissed Mr Lucas’s appeal. Despite recognising that he had been misled and likely didn’t understand the tax process, the law made him responsible for the actions of his appointed agent.

Key Lessons

1. Be cautious with tax rebate services, especially those that promise easy money with minimal documentation.
2. Understand what you’re authorising, signing forms blindly can have serious consequences.
3. Agents’ actions are legally your actions; you may be liable even if you didn’t fully grasp what your agent was doing.
4. Always review tax returns before submission, and ensure all claims can be justified.