Case: No jurisdiction over HMRC’s refusal to accept and/or process tax returns

[2018] UKFTT 0760 (TC)

Judge Barbara Mosedale

Decision released 20 December 2018

Income tax – Taxpayer who received notices to file but failed to file tax returns assessed under TMA 1970, s. 29 (discovery assessments) – Taxpayer’s appeal against assessments unsuccessful – In meantime taxpayer filing tax returns covering same years – HMRC refusing to accept or process tax returns – Purported appeal against that decision – Whether Tribunal has jurisdiction – No - Tribunal Procedure (First-tier) (Tax Chamber) Rules 2009, r. 8(2)(a).

Huntley [2019] TC 06893

Summary

Mr Huntley (the appellant) had been in business as a shop proprietor since at least 1996-97. For most years HMRC had sent the appellant notices to file returns, but he did not submit completed returns, nor did he pay any tax. Having written to the appellant a number of times and having failed to obtain information or returns, in September 2013 HMRC issued discovery assessments under TMA 1970, s. 29 for 1996-97 to 2011-12.

The appellant initially appealed against the assessments, but following a review which upheld the assessments the appellant failed to take any action for nearly two years. He then made an application for the tribunal to accept an out of time appeal, which the tribunal dismissed. The appellant also lodged tax returns for all the years which HMRC had raised discovery assessments, but HMRC did not accept the returns and did not process them. About a year later the appellant lodged an application with the tribunal to be allowed to make a late appeal against HMRC’s refusal to accept or process his returns. The tribunal was uncertain whether to accept the appeal, but in the end it decided to accept it as a valid appeal.

This case deals with HMRC’s application for the proceedings to be struck out on the basis that the tribunal had no jurisdiction.

The appellant’s representative submitted that because the tribunal had accepted the proceedings she did not think that it could then strike out the proceedings, effectively changing its mind. The FTT disagreed and indeed noted that the tribunal needed to accept the proceedings in order for a judge to make a decision on jurisdiction.

The FTT noted that the normal provision conferring jurisdiction in matters concerning individual tax returns was in TMA 1970, s. 31. But that provision did not confer any jurisdiction over a refusal by HMRC to accept and/or process tax returns. The FTT was satisfied that the tribunal had no jurisdiction over HMRC’s refusal to accept and/or process the tax returns the subject of these proceedings and therefore in accordance with the Tribunal Procedure (First-tier) (Tax Chamber) Rules 2009, r. 8(2)(a) it found that the proceedings had to be struck out.

The FTT made various comments, in order to be helpful, including:

(1)The appellant could only challenge HMRC’s refusal to accept and/or process his tax returns by taking ‘judicial review’ proceedings in the administrative division of the High Court.

(2)The appellant appeared to be confused between ‘determinations’ which could not be appealed, but could be displaced by the filing of a tax return, and ‘assessments’ which could be appealed, but which could not be displaced by a tax return, so even if HMRC had accepted the returns as valid they would not have displaced the assessments.

Comment

The taxpayer had been the proprietor of a shop for 15 years but had not submitted any tax returns and had not responded to HMRC’s requests for information. HMRC therefore issued discovery assessments. After the taxpayer’s application to appeal late against the discovery assessments was dismissed, the taxpayer attempted to appeal against HMRC’s refusal to accept or process the tax returns which he had submitted in an attempt to displace the assessments. The FTT found that it had no jurisdiction to hear such an appeal and, in any event, unlike determinations, discovery assessments could not be displaced by tax returns.

For commentary on when the FTT will strike out a party’s case, see In-Depth at ¶189-455.

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