Mathieson
| Jurisdiction | UK Non-devolved |
| Judgment Date | 15 December 2021 |
| Neutral Citation | [2022] UKFTT 11 (TC) |
| Court | First Tier Tribunal (Tax Chamber) |
[2022] UKFTT 11 (TC)
Judge Anne Fairpo
Mr Birkbeck, counsel, instructed by Edwards & Keeping, appeared for the appellant
Mr Chandler, counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the respondents
Procedure – Strike out application – Whether R (on the application of Unison) v Lord Chancellor [2017] UKSC 51; [2017] 3 WLR 409 should be applied to imply appeal rights in respect of TMA 1970, s. 28B(4) notice – No – Application granted – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8(2)(a).
The First-tier Tribunal (FTT) granted HMRC's application to strike out a partner's appeal against a notice amending his tax return which had been issued as part of the closure of an enquiry into an LLP.
The appellant (Mr Mathieson) had claimed loss relief in his tax return in respect of his share of losses reported by an LLP of which he was a member. Following an enquiry HMRC issued a closure notice to the LLP disallowing the partnership losses and amending the LLP's tax return. Although the LLP had initially appealed against the closure notice, after the LLP was put into liquidation the liquidators withdrew the appeal.
HMRC issued Mr Mathieson with a notice under TMA 1970, s. 28B(4) amending his tax return to remove the loss relief.
Mr Mathieson appealed to the FTT, including on the grounds that as a preliminary issue he should be able to appeal against the s. 28B(4) notice. This was because, as a result of the Supreme' Court's decision in R (on the application of Unison) v Lord Chancellor [2017] UKSC 51; [2017] 3 WLR 409 (which ruled that the introduction of employment tribunal fees was unlawful as they prevented access to justice) the notice should be considered to be a closure notice.
HMRC applied for the appeal to be struck out under the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 8(2)(a) because the Tribunal had no jurisdiction to consider the appeal.
The FTT did not consider that the UNISON decision provided any basis to depart from the conclusion of the Upper Tribunal in R (on the application of Reid) v R & C Commrs [2020] BTC 540 (and other decisions) that a s. 28B(4) notice is not a closure notice and cannot be appealed under TMA 1970, s. 31.
Accordingly, the FTT had no jurisdiction in respect of the appeal and granted HMRC's application to strike out the appeal.
The FTT concluded that as previously established, amendments made to individual partners' tax returns as part of closing an enquiry into a partnership return do not constitute closure notices in respect of the individual partners' tax returns, and therefore cannot be appealed.
[1] The Appellant (“Mr Mathieson”) appeals against a notice issued by the Respondents (“HMRC”) on 22 July 2019. The hearing considered two applications in relation to that appeal made firstly by HMRC, to strike out the appeal, and, if that application failed, secondly by Mr Mathieson for postponement of payment of the amount due.
[2] Mr Mathieson was a partner in Scotts Atlantic Distributors LLP (the “LLP”) which invested in a number of film projects. The LLP reported a loss on its 2003 tax return, and Mr Mathieson claimed loss relief in respect of his share of those losses in his 2002/03 tax return.
[3] HMRC enquired into the LLP's 2003 tax return and, on 13 September 2016, issued a closure notice disallowing the partnership losses and amending the LLP tax return accordingly.
[4] The LLP appealed the closure notice to this Tribunal on 16 March 2017. HMRC produced a Statement of Case asserting that the LLP arrangements did not amount to a trading activity with a view to a profit, and that the claimed expenditure was not allowable. The LLP was put into liquidation and the appeal was subsequently withdrawn by the liquidators on 4 January 2019.
[5] On 22 July 2019, HMRC issued Mr Mathieson with a notice under s28B(4) Taxes Management Act 1970 (TMA 1970), advising him that the LLP appeal had been withdrawn and that, as the matter was now final, his 2002/03 self-assessment tax return was amended to remove the loss relief claimed...
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