Case: No right to appeal a closure notice that does not make any amendments

[2018] UKFTT 0660 (TC)

Judge Barbara Mosedale

Decision released 2 October 2018 (amended 14 November 2018)

Income tax - Enquiries – Jurisdiction to prevent amendments under TMA 1970, s. 28B after closure of enquiry – No – Appeal struck out – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8 - Consideration of appellant’s case that closure notice was invalid as notice to file not issued by named officer – TMA 1970, s. 8.

Märtin [2018] TC 06808

Summary

The appellant (Mr Märtin) made a claim to loss relief in his 2012–13 tax return arising out of the activities of Great Marlborough LLP.

(1)On 19 February 2014, HMRC opened (or purportedly opened) an enquiry into Mr Märtin’s 2012–13 tax return, believing that he may have participated in a tax avoidance scheme, very similar to that considered by the FTT and Upper Tribunal in the various Icebreaker and Acornwood cases.

(2)On 15 July 2016, HMRC opened (or purportedly opened) an enquiry into Mr Märtin’s 2014–15 tax return.

(3)On 15 November 2016, Mr Märtin applied to the tribunal to order HMRC to close both enquiries.

(4)On 15 December 2016, HMRC opened (or purportedly opened) an enquiry into Great Marlborough LLP’s 2014-15 tax return.

(5)On 1 March 2017, HMRC closed the enquiry into Mr Märtin’s 2014-15 tax return without making any amendment but said in the letter that they might make amendments to his 2014–15 return following the enquiry into Great Marlborough LLP’s 2014–15 return.

(6)On 12 June 2017, the FTT (in Märtin [2017] TC 05942) ordered HMRC to close the 2012-13 enquiry. The FTT made no order in respect of the 2014-15 enquiry, finding that the enquiry was closed and although there remained the possibility that an amendment might be made to Mr Märtin’s 2014-15 tax return this would have been made under TMA 1970, s. 28B(4) as a result of the enquiry into the LLP’s return and the FTT had no jurisdiction to prevent such an amendment being made.

Mr Märtin lodged proceedings with the FTT, comprising:

an appeal against the enquiry notice which opened the enquiry into his 2014-15 tax return;

an appeal against the closure notice which closed that enquiry; and

an application that the tribunal order HMRC not to make any future amendments to his 2014-15 tax return.

HMRC applied to strike out the appeal. This was mainly on the basis that the tribunal had no jurisdiction to consider the proceedings and therefore the appeal had to be struck out under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8(2)(a). The appellant applied for HMRC to be barred from taking any part in the proceedings because of ‘prejudicial delay’.

The FTT was satisfied that it had no jurisdiction to hear an appeal against the opening of an enquiry as it was not one of the rights of appeal listed in TMA 1970, s. 31.

The FTT was also satisfied that there was no right to appeal a closure notice which made no amendment. And even if there was, it would strike out the proceedings in so far as it sought to appeal that conclusion because Mr Märtin agreed with the conclusion, as he did not think that his 2014-15 return should be amended.

The FTT also found that there was no ability to appeal against HMRC’s comment that they may amend his 2014–15 return following the enquiry into Great Marlborough LLP’s 2014–15 return.

The FTT rejected various other issues raised by Mr Märtin, including that HMRC should be barred from proceedings. However, the FTT did note that Mr Märtin would not be prevented from raising the issue that a notice to file issued automatically by a computer was invalid, but that this issue would only be relevant if at some point HMRC do amend his 2014-15 return and he chooses to appeal that amendment.

Comment

The taxpayer appealed because he wanted certainty that his tax affairs were settled and did not want HMRC to be able to amend his personal return at some future date as the result of amending a partnership return, as HMRC had already closed the enquiry into his tax return without amendment. The tribunal found that at this stage there was nothing for the taxpayer to appeal against, but in due course if HMRC did amend his individual return as a result of amending the partnership return, he would then be able to appeal that amendment.

For commentary on appeals generally, see the Direct Tax Reporter at ¶188-800ff..

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