Paul Harrison v The Commissioners for HM Revenue and Customs [2023] UKUT 00038 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Judge Thomas Scott,Judge Ashley Greenbank |
| Neutral Citation | [2023] UKUT 00038 (TCC) |
| Subject Matter | 3 February 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 06 February 2023 |
Neutral Citation: [2023] UKUT 00038 (TCC)
Case Number: UT/2018/000004
UPPER TRIBUNAL
(Tax and Chancery Chamber) Hearing venue: Video hearing
INCOME TAX - discovery assessment - whether HMRC had discharged burden of establishing
discovery - whether the Upper Tribunal is bound to follow the decision of the Court of Appeal
in Tooth that a discovery assessment may become “stale” because the contrary decision of the
Supreme Court in that case was obiter - quantum of assessment - appeal dismissed
Heard on: 2 November 2022
Judgment date: 03 February 2023
Before
JUDGE THOMAS SCOTT
JUDGE ASHLEY GREENBANK
Between
PAUL HARRISON Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Harriet Brown and Ross Birkbeck, instructed by direct access
For the Respondents: Sadiya Choudhury, instructed by the General Counsel and Solicitor to
His Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. The Respondents (“HMRC”) issued a “discovery” assessment to the Appellant (“Mr
Harrison”) assessing him to income tax for the tax year 2007/08 in respect of his share of the
proceeds of sale of a property. The First-tier Tribunal (“FTT”) dismissed Mr Harrison’s appeal
against the assessment, in a decision published at [2018] UKFTT 359 (TC) (the “Decision”).
The FTT refused Mr Harrison permission to appeal, but the Upper Tribunal granted him
permission to appeal against the Decision on certain grounds, discussed further below. This is
the decision on that appeal.
2. Mr Harrison was represented by Ms Brown and Ross Birkbeck acting pro bono, for
which the Tribunal is most grateful. We are also grateful to Ms Brown and Ms Choudhury for
their helpful submissions.
LEGISLATION
3. For the purposes of this appeal, the primary relevant legislation is that relating to
HMRC’s ability to raise a discovery assessment. At the time when the assessment was issued
this was contained in section 29(1) of the Taxes Management Act 1970 (“TMA 1970”), as
follows:
29 Assessment where loss of tax discovered
(1) If an officer of the Board or the Board discover, as regards any person (the
taxpayer) and a year of assessment—
(a) that any income which ought to have been assessed to income tax, or
chargeable gains which ought to have been assessed to capital gains tax,
have not been assessed, or
(b) that an assessment to tax is or has become insufficient, or
(c) that any relief which has been given is or has become excessive,
the officer or, as the case may be, the Board may, subject to subsections (2)
and (3) below, make an assessment in the amount, or the further amount,
which ought in his or their opinion to be charged in order to make good to the
Crown the loss of tax.
4. Subsections (2) and (3) apply only where a tax return has been made, which was not the
case here.
BACKGROUND AND SUMMARY OF FACTS
5. References below to paragraphs in the form [x] are, unless indicated otherwise, to
paragraphs of the Decision.
6. The FTT set out its findings of fact at [9], which, in summary, were as follows:
(1) Mr Harrison was in partnership with his wife from the 1980s. The partnership
initially traded as forensic accountants and later, from 1990, as property developers.
(2) By 2006 Mr Harrison and his wife expected to receive funds in settlement of
litigation in which the partnership had become involved. They had agreed to purchase a
property called Bearsted from the settlement monies, but the settlement did not
materialise. Mr Harrison’s son and daughter-in-law bought the property instead and sold
it in November 2007 at a profit.
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