The Supreme Court has ruled that, as a general rule, failing to answer a question on a tax return is sufficient to reverse the burden of proof.
Reversal of burden of proof
A taxpayer who fails to submit the required tax return faces a reversal of the burden of proof. This means that the taxpayer must prove that an assessment issued by the tax authorities is incorrect. In sporting terms, this means that the taxpayer is (at least) 0–1 down.
Tick
The case before the Supreme Court concerned the question of whether the taxpayer was involved in a trust or another special-purpose fund. If that is the case, the relevant box must be ticked and the name of the special-purpose fund must be stated.
According to the tax court, the general rule is that providing an incorrect answer or failing to answer one (or more) question(s) on the tax return leads to the conclusion that the return required by law has not been filed (or, within the statutory time limits: not clear, firm and unqualified (a tax return has been filed). It is not necessary for the tax due as stated in the return to be significantly lower than the tax actually due.
Of course, it is not the case that every (minor) error in a tax return immediately leads to a reversal of the burden of proof. The Supreme Court concludes, as did the Court of Appeal, that it should have been abundantly clear to the taxpayer in this case that the question regarding the special-purpose fund should have been ticked. He was a member of the board of directors of a foundation incorporated under Panamanian law and had received two payments of €2,600 from that foundation in the year in question, which he had not declared in his income tax return. The Supreme Court concludes that the tax authorities were right to claim the income tax on these payments retrospectively.