Lee Sharpe looks at how the ‘presumption of continuity’ principle has been used by HMRC.
This article will consider the so-called ‘presumption of continuity’, and in particular how HMRC seeks to use this device to open earlier years for assessment in discovery cases.
First principles
The main case relied on by HMRC is Jonas v Bamford [1973] EWHC 51 TC 1 (Ch), being a ‘back duty case’ spanning several years, orienting around a perceived shortfall in cash income declared. HM’s inspector had undertaken a ‘takings build-up’ or ‘cash deficiency’ exercise based on records provided for a few years, and deduced there were undeclared takings in those years. Also, the taxpayer had failed to provide any records at all for the last three years under review, so the inspector simply issued round-sum assessments
