Märtin
| Jurisdiction | UK Non-devolved |
| Judgment Date | 02 October 2018 |
| Neutral Citation | [2018] UKFTT 660 (TC) |
| Date | 02 October 2018 |
| Court | First Tier Tribunal (Tax Chamber) |
[2018] UKFTT 0660 (TC)
Judge Barbara Mosedale
The appellant appeared in person.
J Davey QC and Mr S Chandler, Counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
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.
The First-tier Tribunal (FTT) struck out a taxpayer's appeal on the basis that it was not possible to appeal against either the opening of an enquiry, or a closure notice which does not make any amendments, and the tribunal could not order HMRC not to make any future amendments to the taxpayer's return as a result of an enquiry into a partnership return.
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.
- 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.
- On 15 July 2016, HMRC opened (or purportedly opened) an enquiry into Mr Märtin's 2014–15 tax return.
- On 15 November 2016, Mr Märtin applied to the tribunal to order HMRC to close both enquiries.
- On 15 December 2016, HMRC opened (or purportedly opened) an enquiry into Great Marlborough LLP's 2014–15 tax return.
- 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.
- 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.
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.
[1] It appeared to be accepted by both parties that the appellant made a claim to loss relief arising out of the activities of Great Marlborough LLP. HMRC's position was that in doing so he may have participated in a tax avoidance scheme, very similar to that considered by the FTT and Upper Tribunal in the various Icebreaker 1 LLP v R & C Commrs [2011] BTC 1,579 and Acornwood LLP v R & C Commrs [2016] BTC 517 cases.
[2] On 19 February 2014, HMRC opened (or purported to open) an enquiry into the appellant's 2012/13 tax return. On 15 July 2016, HMRC opened (or purported to open) an enquiry into the appellant's 14/15 tax return (filed 2 January 2016). On 15 November 2016, the appellant made an application to the Tribunal to order HMRC to close the two enquiries. On 1 March 2017, HMRC closed the enquiry into the 14/15 return without making any amendment to that tax return.
[3] So far as the partnership, Great Marlborough LLP, was concerned, HMRC opened (or purported to open) an enquiry into its 14/15 tax return on 15 December 2016.
[4] The Tribunal heard Mr Märtin's closure application on 22 May 2017. By decision dated 12 June 2017 and reported at [2017] TC 05942, I ordered HMRC to close the enquiry into the appellant's 12/13 return. I made no order in respect of the 14/15 enquiry. My decision records the reason for this as follows:
[7] In the hearing, Mr Märtin indicated that he did not accept that the Tribunal had no jurisdiction with respect to the 14/15 enquiry. While it had been closed, with no amendments being made, the letter from HMRC dated 1 March 2017 stated that there might be amendments to his 14/15 tax return following the enquiry into Great Marlborough LLP's 14/15 tax return.
[8] As I understood Mr Märtin's point, it was that he did not accept that HMRC had actually closed the 14/15 enquiry, because they had indicated that they might make later amendments. Therefore, if the enquiry was not closed, that left scope for the Tribunal to order closure.
[9] However, I do not agree with Mr Märtin's premise: on the contrary, I consider that the 14/15 enquiry was closed. The letter of 1 March 2017 clearly stated that the enquiry was complete and that no amendment of the return was needed. It therefore fulfilled the requirements of s 28A(1) and (2)(a). While it did indicate that there might be later amendments to Mr Märtin's 14/15 tax return, it clearly stated that any such amendment would be as a result of the check on Great Marlborough LLP. S28B(4) TMA entitles HMRC to amend a partner's returns following an enquiry into the partnership tax return: that is a quite separate power to the one which enabled HMRC to amend a taxpayer's return after an enquiry into it. So the 14/15 enquiry was closed but there remained for Mr Märtin the possibility that an amendment to his 14/15 tax return made under s 28B(4). This Tribunal has no jurisdiction to prevent such an amendment being made.
[10] In conclusion, I find that this tribunal in this hearing had no jurisdiction to order closure of the 14/15 enquiry as it had been closed before the hearing took place.
[5] On 14 July 2017, the appellant then lodged proceedings with this Tribunal which was stated to be an appeal against a review letter dated 14 June 2017. That letter stated that there was no right to appeal the closure notice for tax year 14/15 because it made no amendment to the 14/15 tax return. However, Mr Märtin's appeal to the Tribunal was expressed to be in wider terms and could be constructed as:
- 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 14/15 tax return.
[6] HMRC applied to strike out the appeal; the appellant applied for HMRC to be barred from taking any part in the proceedings.
[7] It is logical to consider HMRC's strike out application first: it was brought primarily on the basis that the Tribunal has no jurisdiction to consider the proceedings brought by the appellant. As rule 8(2)(a) of the FTT Rules provides that the Tribunal must strike out an appeal if it has no jurisdiction to hear it, I must consider whether the Tribunal has jurisdiction before I could make any other directions in the proceedings.
[8] HMRC say the Tribunal has no jurisdiction over the proceedings for the following reasons. In so far as it is an appeal against the opening of an enquiry, HMRC say there is no jurisdiction because:
- There is no right to appeal against the opening of an enquiry;
- Even if there was such a right, Mr Märtin was out of time to do so and has not (yet) applied to HMRC to make a late appeal.
In so far as it is an appeal against the closure of the enquiry, HMRC say there is no jurisdiction because:
- There is no right of appeal against a closure notice which does not amend the tax return the subject of the enquiry;
- In any event, it is abusive for Mr Märtin to seek to re-litigate a matter already determined against him in the earlier hearing (in particular at [9] of my...
To continue reading
Request your trial
-
Martin
...right to state in her earlier decision in this case when considering a similar point in relation to the Appellant's 14/15 return: Märtin [2018] TC 06808 stated: [86] Secondly, if he was right that the notice to file was invalid, then it follows that his tax return was not a s 9 tax return; ......