Roland Pooley and Joan Mary Pooley v Her Majesty's Revenue & Customs

Facts

Mr Roland Pooley and his wife, Mrs Joan Mary Pooley, ran a ladies outerwear shop in a small market town from 1972 until its closure in December 1995, Mrs Pooley having become a partner by the start of the 1986-87 year of assessment. Mrs Pooley bought and sold the stock; Mr Pooley kept the books, banked the takings and prepared the VAT returns, with accountants preparing the annual accounts and returns. Returns and accounts for a run of years were filed very late — several in July 1991 — and Mr Thomas, the local Inspector of Taxes, opened an investigation in September 1991, later extended to all the years in issue. The Revenue took the view that there were no proper stock records or stock valuations, that the accounts had been back-worked from an assumed 35 per cent gross profit rate, and raised further and estimated assessments on the partnership for 1987-88 to 1994-95 and further assessments on Mr Pooley alone for 1985-86, 1988-89 and 1989-90. The matter was transferred from the General Commissioners to the Special Commissioners, and after three directions hearings came before Dr David Williams over three days in November 2005. Repeated attempts at settlement had failed.