Freelance finance journalist Stephen Lynch gives the rundown on a tax case, where a tribunal found in favour of a dentist who made the mistake of listening to his accountant

A dentist has successfully appealed his tax case against HM Revenue and Customs (HMRC) without a lawyer or accountant to represent him.

Jaroslaw Krason, a Polish national based in Nottingham, was shocked to discover a claim from the tax authorities for the sum of £224,750.

At a first tier tribunal (FTT), HMRC asserted that Krason’s actions had either been ‘deliberate and concealed’ or that he had acted carelessly when dealing with his tax affairs.

Trusted adviser

Shortly after his arrival in the UK in 2001, colleagues recommended Krason employ the Moor Green accountancy firm to prepare his accounts and tax returns. The Birmingham practice was run by a former HMRC officer – Masoud Davood – and affiliated with several professional accountancy bodies.

In 2012, Davood said that Krason was paying too much tax. Krason confirmed with his fellow dentists that Davood had substantially, and legitimately cut their tax liabilities.

Davood advised Krason to form a trust, where he would pay 11% of his gross earnings every month – on the understanding this was legitimate and that it would be paid directly to HMRC.

Unfortunately for Krason, it seemed he wasn’t told the truth.

This was a complicated structure facilitating tax avoidance, using loans in an offshore trust set up by the Baxendale Walker Ltd company – linked to a notorious solicitor now struck off from the legal profession.

The 11% did not go to the trust or HMRC, but rather was a fee paid to Baxendale Walker.

On the advice of Davood, Krason signed documents to establish a ‘personal management company’ with a separate bank account, and was told that he would swiftly receive a large payment from HMRC.

This package of documents – titled ‘Umbrella Remuneration Trust’ – contained lots of small print in dense legal language.

Complex documents

In the tax tribunal, Krason robustly insisted that he didn’t understand these agreements, or their ramifications.

The judge Anne Redston found this to be plausible defence for the following reasons:

  • The documents were complicated
  • Krason was unfamiliar with trust structures and financial matters
  • English was not Krason’s native language
  • Krason fully trusted Davood ‘as an expert in the field of taxation, founded on his professional qualifications, his previous HMRC employment and [Mr] Krason’s seven previous years of experience using Moor Green to draw up his accounts and file his tax returns.’

HMRC investigation

In 2018, HMRC commenced their investigation. They issued a ‘Code of Practice 9’ (COP9) letter alleging suspicion of tax fraud, to which Davood strongly disputed and then instructed a barrister who would ‘save everything and it will all be fine.’

Moor Green accountants heavily redacted the bank statements from Krason that HMRC demanded.

In 2019, HMRC issued decisions that disallowed deductions for five years, and months later issued closure notices for two further years and 66% penalties. This was on the basis that Krason acted deliberately, and with concealment.

These penalties totalled £224,750.

Financial fallout

HMRC then successfully had the FTT dismiss the appeals made by Krason and two other Polish dentists caught up in the scheme.

Krason returned to Poland to care for his elderly, terminally ill mother and was forced to sell his home and car to pay the ‘discovery assessment’ debts due to HMRC.

A second hearing in October 2025 struck out Krason’s appeals, one he attended in person and unable to afford a barrister.

Judge Redston dismissed his appeals against the closure notices but ordered a separate penalties hearing.

Meanwhile, to settle the increasing liabilities he was facing Krason agreed to pay the final £30,000 of his savings plus £1,200 a month for 10 years leaving only £150 a month to live on.

Penalties overturned

HMRC argued the penalties were legitimate as they were alleging Krason acted deliberately, given he signed the documents to enter into a failed scheme for avoiding tax. Under consistent questioning and cross-examination, Krason strongly denied this, saying he relied on Davood and had no suspicions.

In the end, Judge Redston ruled that Krason did NOT know the scheme did not work. She decided this was consistent with his: shock on receiving the COP9 letter; lack of finance and business knowledge; continued belief that his 11% contributions were going to the trust and be paid to HMRC; and complete faith in Davood, ‘his long-standing accountant and tax adviser, who confidently and repeatedly reassured him that it was legitimate.’

Furthermore, the decision said Krason behaved like an honest witness and ‘a reasonable taxpayer’ who had neither understood the trust arrangements, nor redacted the data provided to HMRC.

The judge also granted HMRC the right to appeal.

Krason said entering this tax scheme was ‘the biggest mistake of [his] life’ and ‘a nightmare’; the consequences have damaged his health and destroyed his financial security.

Stephen Lynch is a freelance business journalist