Darren Demetriou v Commissioners for Her Majesty's Revenue and Customs

Facts

The appellant, Darren Demetriou, was a partner in the solicitors' firm Hunt & Hunt from 2000 until 31 August 2005. He accepted that he had caused money to be transferred to a client of the firm to which that client was not entitled, in the sum of some £90,000. Hunt & Hunt brought proceedings against both the appellant and the client to recover the money, and the Law Society instituted disciplinary proceedings which resulted in the appellant being struck off the roll of solicitors; he was asked to retire from the partnership, which he did with effect from 31 August 2005. He did not defend the recovery action, accepting that he was liable to refund the money, but the client's unsuccessful defence produced a further liability on his part for the firm's legal costs. On his retirement the partnership owed him his profit shares for 2004/05 and for 2005/06 to the date of retirement, some £65,000, together with a share of the tax reserves. By a letter of 13 March 2007 the firm acknowledged those sums but paid him only £884.07, setting off the remainder against the monies due under the court order, the firm's legal costs and his drawings. He returned his profit share as nil for 2005/06. HMRC opened an enquiry and, following a review, assessed him to tax of £20,357.09. He appealed to the First-tier Tribunal.