Coolatinney Developments Ltd and Others
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 April 2011 |
| Neutral Citation | [2011] UKFTT 252 (TC) |
| Date | 15 April 2011 |
| Court | First Tier Tribunal (Tax Chamber) |
[2011] UKFTT 252 (TC)
Judge Roger Berner (Chairman), Nigel Collard (Member)
David Hannah, Cornerstone Tax Advisers, for the Appellants
Mario Angiolini, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Stamp duty land tax (SDLT) - notices of enquiry into land transaction returns (FA 2003, Finance Act 2003 schedule 10 subsec-or-para 12Sch 10, para. 12) - letter wrongly referring to self certificate - whether notice effective - whether mistake in the notice-whether Finance Act 2003 section 83 subsec-or-para 2s. 83(2) prevented notice from being ineffective
1.These are joined appeals brought under Finance Act 2003 schedule 10 subsec-or-para 15para. 15, Sch. 10, Finance Act 2003 ("FA 2003") against a requirement imposed by a notice under Finance Act 2003 schedule 10 subsec-or-para 14para. 14 that the Appellants produce documents or information in connection with an enquiry into land transaction returns for the purpose of stamp duty land tax ("SDLT"). The sole issue before us concerns the validity or otherwise of purported notices of enquiry under Finance Act 2003 schedule 10 subsec-or-para 12para. 12, Sch. 10.
2.There was no dispute on the background facts, which we can summarise quite shortly.
3.Taken together, four property transactions overall were entered into by the Appellants, and were notified to HMRC on a timely basis, between 12 December 2007 and 26 March 2008, by way of land transaction returns (forms SDLT1). None of the Appellants filed a self certificate (SDLT60) in relation to any of the transactions.
4.Each of the land transaction returns was accompanied by a letter from Cornerstone Tax Advisers ("Cornerstone") setting out details of the relevant transactions and submitting, for reasons that are outside the scope of the appeal before us, that no SDLT would arise on the transactions.
5.In relation to three transactions, HMRC wrote to Cornerstone on 11 March 2008 to say that the "clearance" applications made by Cornerstone were not accepted, and that there would be no confirmation of HMRC's view. No such letter was written with respect to the fourth transaction, the return for which was submitted only on 26 March 2008.
6.On 18 and 19 August 2008 HMRC wrote to each of the Appellants. In each case these letters wrongly stated that HMRC intended to make enquiries into "your self certificate" regarding the property or properties mentioned in the heading to the letter. The letter stated that it enclosed (and there was no dispute that it did enclose) a copy of a letter written to the Appellant's agent asking for information, and a copy of Code of Practice COP25.
7.The letter to the Appellant's agent in each case stated that notice had been issued to each of the relevant Appellants under Finance Act 2003 schedule 10 subsec-or-para 12para. 12, Sch. 10 FA 2003 of HMRC's intention to enquire into their land transaction returns, and requiring certain documents and information set out in an enclosed schedule.
8.Code of Practice COP25 is headed "Enquiries into companies and partnerships". On its first page of text it states that it is to explain how Stamp Offices carry out enquiries into company and partnership land transaction returns. It goes on to explain that information is asked for to help HMRC understand the amount of SDLT the company (or partnership) has paid and to check that it is right. The process is set out, including the procedure on the start of the enquiry; namely that HMRC will write to the company (or partnership), and their advisers (if any) to inform them that HMRC intend to start enquiries and to explain their rights and responsibilities.
9.On 29 October 2008, Cornerstone wrote to HMRC in respect of each transaction and each Appellant referring to the notices and asserting that they had been incorrectly issued as the Appellants had not rendered any form of self certificate in respect of the transactions in question. The letters request in each case confirmation that the notices had been withdrawn and the enquiries closed.
10.By letters dated 4 November 2008 addressed to the Appellants' respective agents (but not to the Appellants themselves) HMRC responded to the Cornerstone letters of 29 October. In those letters HMRC said:
I apologise for the errors in the enquiry notices to your clients. The words "self certificate" obviously should have read "land transaction return".
Under Finance Act 2003 schedule 11Schedule 11 Finance Act 2003 (FA 2003) references to a "self certificate" are to a certificate by the purchaser that no land transaction return is required in respect of the transaction'. As the purchaser submitted a land transaction return (as opposed to completing a self certificate) in respect of the property transaction, the detail of which was fully identified in the notice, any reasonable person would have concluded that the enquiry related to the SDLT return in respect of that transaction.
11.At the time of the November 2008 letters, the enquiry window for the opening of an enquiry into a land transaction return had already closed in respect of two out of the four transactions. It remained open in the other two. No further notice of enquiry was given by HMRC.
12.Following further requests by HMRC for the documents and information to be provided, and a review by HMRC, the Appellants appealed on 29 April 2010 against the Finance Act 2003 schedule 10 subsec-or-para 14para. 14, Sch. 10 notices to produce documents and provide information.
13.Finance Act 2003 schedule 10Schedule 10 FA 2003 makes provision, in relation to SDLT, with respect to land transaction returns, enquiries, assessments and appeals. The general scheme of the legislation is to permit HMRC, within a defined period, to enquire into a land transaction return. If an enquiry is opened it will be completed when HMRC issue a closure notice (para. 23). There are provisions for an application to the tribunal for a direction that HMRC issue a closure notice (para. 24). If no enquiry is opened, then subject only to a discovery assessment in applicable circumstances, HMRC will no longer have the power to raise an assessment or make an amendment to a return.
14.The provision for notice of enquiry is contained in para. 12, Sch. 10 FA 2003. So far as material to the period in question, this provides:
-
(1)The Inland Revenue may enquire into a land transaction return if they give notice of their intention to do so ("notice of enquiry")-
(a) to the purchaser,
(b) before the end of the enquiry period.
(2)The enquiry period is the period of nine months-
(a) after the filing date, if the return was delivered on or before that date;
(b) after the date on which the return was delivered, if the return was delivered after the filing date;
(c) after the date on which the amendment was made, if the return is amended under paragraph 6 (amendment by purchaser).
15.Before its repeal with respect to transactions with an effective date on or after 12 March 2008, Finance Act 2003 part 1 schedule 11Part 1, Sch. 11 FA 2003 made provision for a self certificate by a purchaser that no land transaction return was required in respect of a transaction. Finance Act 2003 part 3 schedule 11Part 3, Sch. 11 (repealed at the same time) made provision for...
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Parsons
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