Khan and Others
| Jurisdiction | UK Non-devolved |
| Judgment Date | 21 December 2009 |
| Neutral Citation | [2010] UKFTT 19 (TC) |
| Date | 21 December 2009 |
| Court | First Tier Tribunal (Tax Chamber) |
[2010] UKFTT 19 (TC)
John Brooks (Judge) (Chairman), James Midgley (Member)
Milan Patel of King & King Chartered Accountants for all of the Appellants
Nick Branigan of HM Revenue and Customs for the Respondents
Applications for directions to close enquiry into tax returns - whether possible to give directions - applications dismissed - Taxes Management Act 1970, Taxes Management Act 1970 section 28As. 28A and Finance Act 1998, Finance Act 1998 schedule 18 subsec-or-para 33Sch. 18, para. 33
The tribunal did not have power under TMA 1970, Taxes Management Act 1970 section 28As. 28A or FA 1998, Finance Act 1998 schedule 18 subsec-or-para 33Sch. 18, para. 33 to direct the closure of an investigation unless the enquiry was commenced by way of a Taxes Management Act 1970 section 9As. 9A notice or its corporation tax equivalent. In the present case the documents relied on by the taxpayers were not s. 9A notices or notices made under their corporation tax equivalent.
The taxpayers applied to the tribunal for a direction requiring HMRC to issue closure notices to complete enquiries in respect of each taxpayer within a specified period under TMA 1970, s. 28A or its corporation tax equivalent under FA 1998, Sch. 18, para. 33. HMRC submitted, as a preliminary issue, that the tribunal should dismiss the applications of all of the taxpayers except those who had been given notice of an enquiry under TMA 1970, s. 9A or the corporation tax equivalent. They contended that under the legislation a closure notice could only be given where a taxpayer had been given notice of an enquiry into a tax return and in the case of the remaining taxpayers the investigations into their respective tax affairs had not been undertaken by way of notice of an enquiry but in accordance with HMRC's Code of Practice 9 (COP 9).
Whether a closure notice could only be given where a taxpayer had been given notice of an enquiry into a tax return by way of a s. 9A notice or its corporation tax equivalent; whether there were reasonable grounds for not issuing closure notices.
The First-tier Tribunal (John Brooks and James Midgley) (dismissing the applications) said that the tribunal did not have power under TMA 1970, s. 28A or FA 1998, Sch. 18, para. 33 to direct the closure of an investigation unless the enquiry is commenced by way of a s. 9A notice or its corporation tax equivalent (Lee v R & C CommrsSCD(2008) Sp C 715 applied).
Although there was no set form provided for in law for a s. 9A notice, entirely general language in a letter might not be adequate notice engaging s. 9A. In particular, an indication of relevant dates was needed because s. 9A(2) provided a specific "window" with regard to any return. The section expressly provided for a limited time in which an enquiry might be started and it did not empower a general investigation into a taxpayer's affairs. The consequence to HMRC, if proper language was not used in a s. 9A notice, was that HMRC might later have to establish that the far stricter requirements of s. 29 were met. In the present case letters relied upon by the taxpayers were not s. 9A notices or notices made under their corporation tax equivalent. Consequently the tribunal did not have the power to give a direction to close the investigations in respect of those taxpayers.
As regards the remaining taxpayers, the tribunal was required to give the directions applied for under s. 28A, and FA 1998, Sch. 18, para. 33 unless HMRC had satisfied it that there were reasonable grounds for not issuing a closure notice within a specified period. Having considered the evidence and submissions of the parties, the tribunal was satisfied that there were reasonable grounds for not issuing a closure notice in respect the s. 9A enquiries into the relevant tax returns.
1. The Appellants listed above apply to the Tribunal for a direction requiring HM Revenue and Customs ("HMRC") to "give a closure notice" to complete an enquiry in respect of...
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