HMRC wins big in “tax on gifts” case
Bernie Ecclestone’s lawyer faces a massive tax bill following the First-tier Tribunal’s (FTT’s) ruling that sums he received as gifts were income. What made the FTT decide the payments were taxable?
Over a period of 14 years Bernie Ecclestone’s former wife, Slavica, made payments totalling around £37 million to Stephen Mullens, Ecclestone’s lawyer. He claimed these gifts resulted from their "personal relationship of friendship and affection" and that they were wholly outside and distinct from any business relationship. Despite hearing evidence of Mrs Ecclestone’s generosity and a document purporting to be a deed of gift relating to a payment in 2006, the FTT considered all the payments, apart from one, were actually a reward for professional services provided by Mullens.
It is possible for a payment to be a gift, and so not taxable as income, even where a business relationship exists between the payer and the recipient, but the burden of proof is high. Mullen’s case was hindered because neither Bernie Ecclestone nor his former wife gave evidence. The FTT judges said they had no hesitation in deciding that Mullens had acted fraudulently in not declaring the payments and then representing them as gifts.
The FTT also ruled that because of Mullen’s deliberate action to hide the payments HMRC was entitled to make back-assessments under the rules of discovery. These give HMRC more time (up to 20 years) in cases of tax lost because of fraud compared with that lost from carelessness.
Related Topics
-
HMRC checks directors’ loans are paid up
HMRC is writing to agents to check corporation tax returns for previous years are correct as it used to be possible to add a future date for an anticipated loan repayment. What’s the issue and what should you do if your advisor receives a letter?
-
Working from home tax relief scrapped in Budget
Employees who are required to work from home are currently able to claim tax relief at a flat rate of £6 per week. That's changing from 6 April 2026. What's the full story?
-
Government quietly confirms change to key tax deduction
The headlines for individuals at last week's Budget were all about the income tax hikes. But the small print contained confirmation of another important change. What’s the full story?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.