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HMRC internal manual

Enquiry Manual

Working the Enquiry: Tax Cases: Moschi v Kelly (and v CIR) 33TC442

Cash paid into business from September 1933 to June 1943 of £14,862 and cheques paid into business for the year to June 1944 of £19,233 were shown as capital introduced in the accounts.

In addition it was agreed on behalf of the Appellant that, at 9 June 1945, he possessed diamonds and jewellery of an estimated value of £10,000.

The source of this capital was alleged to be the sale of diamonds and foreign currency smuggled into the United Kingdom when Moschi came from Germany in 1933.

The Inspector gave information about loans etc needed in 1939 for financing the business, an earlier statement of worth showing only £9,550 cash and a particular cheque for £1,500 from a customer for goods supplied included in the cheques.

The Commissioners found that the source of moneys introduced was further profits of the business; also that a deduction claimed for wife’s wages not actually paid was inadmissible.

The Commissioners’ decision was upheld both in the High Court and in the Court of Appeal. Donovan, J, after reviewing the evidence referred to ‘this tissue of falsehoods - because without any beating about the bush that is what they were’.