Henkes
| Jurisdiction | UK Non-devolved |
| Judgment Date | 20 March 2020 |
| Neutral Citation | [2020] UKFTT 159 (TC) |
| Date | 20 March 2020 |
| Court | First Tier Tribunal (Tax Chamber) |
[2020] UKFTT 159 (TC)
Judge Tony Beare
Procedure – Application for final and partial closure notices – Appeal against an information notice – Whether the First-tier Tribunal has the jurisdiction to determine (and, if so, should determine) the Appellant's domicile as a preliminary issue in the course of the proceedings before addressing whether the Respondents have reasonable grounds for continuing with their enquiries, the requested information is reasonably required or an officer of the Respondents has reason to suspect an under-assessment – Yes in each case – Conclusion that the Appellant was UK – Domiciled in the tax years in question.
[1] This decision is concerned with two related matters as follows:
- an application dated 17 October 2018 for an order directing the closure, by way of final closure notices (FCNs and, each, an FCN) of the enquiries by the Respondents into the tax returns made by the Appellant in respect of the tax years ending 5 April 2015 and 5 April 2016 (or, in the alternative, an order directing that partial closure notices (PCNs and, each, a PCN) be given in respect of the Appellant's claim to be entitled to be taxed on the remittance basis in respect of those two tax years; and
- an appeal (notified on 8 February 2019) against a notice dated 22 January 2019 (the IN) seeking:certain information which the Respondents say is required to be provided to them before they can be in a position to issue the FCNs or PCNs referred to in paragraph 1(1) above; andsimilar information in relation to the tax year ending 5 April 2014.
[2] The Appellant is a taxpayer who considers himself to be domiciled outside the UK. Accordingly, in respect of the tax years referred to in paragraph 1 above, the Appellant filed his tax returns on the basis that he was entitled to be taxed (and elected to be taxed) on the remittance basis.
[3] The Respondents have, since 8 December 2016, been looking into the domicile status of the Appellant, in the course of their enquiries into the tax year ending 5 April 2015 and, from 1 November 2017, the tax year ending 5 April 2016. In relation to both tax years, the questions which were raised by the Respondents related to the Appellant's claim to be domiciled outside the UK. In the course of their enquiries, the Respondents reached the conclusion, following the making of the application for the FCNs, that, whilst they accepted that the Appellant had a domicile of origin outside the UK, they considered that the Appellant had acquired a UK domicile of choice at some point after 2003, when the Appellant retired from his position as CEO of the global chemicals business of Shell, and before the start of the tax year ending 5 April 2014. Accordingly, the Respondents issued the IN in order to ascertain information about the Appellant's worldwide income and gains. In short, the Respondents consider that:
- they are entitled to amend the Appellant's self-assessment to tax in respect of each of the two later tax years and to check the Appellant's income and gains position in respect of the earliest tax year because they consider that the Appellant was in fact UK-domiciled during the relevant tax years; and
- in order to do that, they need the further information which they have requested in the IN.
[4] he legislation which is relevant to the present decision is the legislation pertaining to closure notices and the legislation pertaining to INs.
[5] The relevant legislation in relation to closure notices is to be found in section 28A of the Taxes Management Act 1970 (the “TMA”), as amended by the Finance (No 2) Act 2017 in relation to enquiries which were either opened on or after 16 November 2017 or in progress immediately before that date – see paragraph 44 of Schedule 15 to the Finance (No 2) Act 2017. As so amended, that section provides as follows:
(1) This section applies in relation to an enquiry under section 9A(1) or 12ZM of this Act.
(1A) Any matter to which the enquiry relates is completed when an officer of Revenue and Customs informs the taxpayer by notice (a “partial closure notice”) that the officer has completed his enquiries into that matter.
(1B) The enquiry is completed when an officer of Revenue and Customs informs the taxpayer by notice (a “final closure notice”) –
- in a case where no partial closure notice has been given, that the officer has completed his enquiries, or
- in a case where one or more partial closure notices have been given, that the officer has completed his remaining enquiries.
(2) A partial or final closure notice must state the officer's conclusions and –
- state that in the officer's opinion no amendment of the return is required, or
- make the amendments of the return required to give effect to his conclusions.
(3) A partial or final closure notice takes effect when it is issued.
(4) The taxpayer may apply to the tribunal for a direction requiring an officer of the Board to issue a partial or final closure notice within a specified period.
(5) Any such application is to be subject to the relevant provisions of Part 5 of this Act (see, in particular, section 48(2)(b)).
(6) The tribunal shall give the direction applied for unless satisfied that there are reasonable grounds for not issuing the partial or final closure notice within a specified period.
(7) In this section 'the taxpayer' means the person to whom notice of enquiry was given.
(8) In the Taxes Acts, references to a closure notice under this section are to a partial or final closure notice under this section.
[6] A taxpayer has the right to appeal against any conclusion stated or amendment made by a closure notice, whether that be an FCN or a PCN – see section 31(1)(b) of the TMA – and, where an appeal is made to the First-tier Tribunal, the First-tier Tribunal has the power to increase or reduce an assessment or to allow or disallow (to any extent) any claim or election – see section 50 of the TMA.
[7] Another provision in the TMA which is relevant in the context of this decision is section 28ZA. This provides that, “at any time when an enquiry is in progress under section 9A(1) … of this Act in relation to any matter, any question arising in connection with the subject-matter of the enquiry may be referred to the tribunal for its determination”. The section further provides that any such referral must be made jointly by the taxpayer and an officer of the Respondents and that more than one such referral may be given under the section in relation to any enquiry.
[8] The relevant legislation in relation to INs is to be found in Schedule 36 to the Finance Act 2008 (“Schedule 36”). The main provision of that schedule which is relevant to this decision is paragraph 1(1), which provides as follows:
(1) An officer of Revenue and Customs may by notice in writing require a person (“the taxpayer”)–
- to provide information, or
- to produce a document,
if the information or document is reasonably required by the officer for the purpose of checking the taxpayer's tax position.
A notice given under paragraph 1(1) of Schedule 36 is referred to throughout the schedule, and in this decision, as a “taxpayer notice”.
[9] Various expressions used in paragraph 1(1) of Schedule 36 are defined elsewhere in the schedule. The expression “checking” is defined by paragraph 58 to include “carrying out an investigation or enquiry of any kind”. The expression “tax” is defined by paragraph 63(1) to include, among other taxes, income tax and capital gains tax (see paragraph (1)(a) and (b)). Paragraph 64 sets out what is meant by “tax position” but the details of the definition are not relevant to these proceedings.
[10] Paragraph 29(1) of Schedule 36 confers a right on a taxpayer to whom a taxpayer notice has been given to appeal against the notice or any requirement in the notice. The right of appeal does not apply to a requirement in a taxpayer notice to provide any information, or produce any document, that forms part of the taxpayer's “statutory records” (as defined in paragraph 62 of Schedule 36) (see paragraph 1(2) of Schedule 36) or if the tribunal has approved the giving of the notice (see paragraph 1(3) of Schedule 36). However, it is common ground that neither of those provisions is relevant in this case. Paragraph 32 of Schedule 36 contains provisions about the procedure for appeals under Part 5 of Schedule 36 (and paragraph 29(1) is in that Part). And paragraph 32 of Schedule 36 provides that, notwithstanding sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007, a decision of the tribunal on an appeal under Part 5 of Schedule 36 is final.
[11] Finally, paragraph 21 of Schedule 36 is relevant to the information which the Respondents have requested in the IN in respect of the tax year ending 5 April 2014. As there is no open enquiry in relation to that tax year, an IN may be issued in respect of it only if one of four conditions in that paragraph is satisfied in relation to the tax year in question. In that regard, it is common ground that the condition which is relevant in this case is Condition B, which is set out in paragraph 21(6) of Schedule 36 and stipulates as follows:
Condition B is that an officer of Revenue and Customs has reason to suspect that–
- an amount that ought to have been assessed to relevant tax for the chargeable period may not have been assessed,
- an assessment to relevant tax for the chargeable period may be or have become insufficient, or
- relief from relevant tax given for the chargeable period may be or have become excessive.
[12] Accordingly, to the extent that the IN relates to that tax year, the Respondents are required to show that one of their officers has “reason to suspect” the existence of one of the matters referred to in that paragraph.
[13] In the course of the...
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Perlman
...the taxpayer's domicile was the same conclusion as that reached by the FTT in Executors of Mrs Levy[2019] TC 07233. However, in Henkes [2020] TC 07645, the FTT found that it did have the jurisdiction to decide the appellant's domicile. DECISION Introduction and summary [1] Mr Perlman was bo......
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Waterside Escapes Ltd
...intention not being found. In a different context (there, relating to domicile), this Tribunal (Judge Tony Beare) wrote in Henkes [2020] TC 07645 at [152]: … we are dealing here with a question of the Appellant's intentions, which is to say the Appellant's state of mind. … this requires not......