Revell
| Jurisdiction | UK Non-devolved |
| Judgment Date | 16 February 2016 |
| Neutral Citation | [2016] UKFTT 0097 (TC) |
| Date | 16 February 2016 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Timothy Herrington, Carol Debell (Tribunal Member)
Mrs J Carter, Simia Farra & Company, appeared for the Appellant
Mr J Kruyer, Presenting Officer, instructed by the General Counsel and Solicitor to HM Revenue and Customs, appeared for the Respondents
Income tax – Whether appellant served with valid notice to file return – No – Whether valid enquiry opened into return and valid closure notice issued no – Appeal allowed – Taxes Management Act 1970 (TMA 1970), s. 8, 9A, 28A, 34 and 115.
The First-tier Tribunal (FTT) allowed a taxpayer's appeal against a closure notice in respect of an underpayment identified on his PAYE record. The FTT found that an enquiry could not be validly opened and thus nor could a closure notice be validly issued because no valid notice to complete a tax return had been made. The notice to complete a tax return had not been sent to the most recent address HMRC had for the taxpayer and the submission of an unsolicited tax return did not mean that the taxpayer had waived the requirement for such a notice.
The appellant (Mr Revell) was a professional footballer and all his tax was accounted for through PAYE. In March 2011 HMRC identified an underpayment on Mr Revell's PAYE record for 2008–09. Although HMRC were aware of Mr Revell's address at the time in Brentwood (from a P45 issued in July 2010) they sent the underpayment calculation to an old address and Mr Revell never received it. As Mr Revell did not respond to the underpayment notification, in September 2012 HMRC issued a self-assessment return for 2008–09, but again although HMRC had been informed (in a P60 for 2011–12) that Mr Revell had a new address they sent it to the Brentwood address and Mr Revell never received the return. In the absence of a completed return, in February 2014 HMRC issued a determination under the Taxes Management Act 1970 (TMA 1970), s. 28C in relation to the underpayment of tax it contended was due for 2008–09. As the only way to supersede a determination was to submit a return, Mr Revell submitted a 2008–09 tax return in March 2011 which included a notional credit resulting in the return showing that no tax was due for the year. HMRC purported to open an enquiry into the return under TMA 1970, s. 9A and following completion of that enquiry, issued a closure notice removing the notional credit thus increasing the tax due for the year to £16,519.
Mr Revell appealed against the closure notice on the basis that as there had been no valid request to file a self-assessment return under TMA 1970, s. 8 HMRC could not open an enquiry under s. 9A and consequently the closure notice was invalid.
HMRC contended that the return should have been regarded as an unsolicited return and the taxpayer should have been taken to have waived the requirement for a notice under TMA 1970, s. 8. This was based on this long-standing advice from their solicitors:
In my view that which is intended to be a return, whether paper or electronic and is in an appropriate form may properly be regarded as a statutory return. I appreciate that the statutory scheme puts an obligation on the taxpayer to make a return arise [sic] only once he receives a notice which requires him to do so. But in any case in which an unsolicited return has been received, the better view, as it seems to me, is that the taxpayer has waived the formal notice step
The FTT found that the request to make and deliver a tax return was not served in compliance with the provisions of TMA 1970, s. 115 because at the time the request was made the address to which it was sent was no longer Mr Revell's usual or last known place of residence, HMRC having received a more up-to-date address by virtue of its receipt of a form P60 issued for 2011–12. Neither was there any suggestion that the address to which the return was sent was his place of business or employment. Accordingly, the presumption of service in the Interpretation Act 1978, s. 7 could not apply.
The FTT rejected HMRC's analysis that by a taxpayer making an unsolicited return the taxpayer had waived the requirement for a notice under TMA 1970, s. 8. The legislation made no provision for such a waiver and if Parliament had intended the submission of a voluntary return to amount to such a waiver it could have said so.
Given that for a determination to be made under TMA 1970, s. 28C a notice must have been given under s. 8, the FTT found that no valid determination had been made under s. 28C. The FTT also found that the return submitted by Mr Revell should have been characterised as a notice of liability to income tax under s. 7 rather than a self-assessment tax return. Therefore had the time limit in s. 34 not expired HMRC could then have issued a request for a self-assessment return under s. 8.
The FTT concluded that both the notice of enquiry and the closure notice were invalid and the assessment to income tax for 2008–09 had to be discharged.
In this case HMRC appear to have failed both the taxpayer and the wider UK population. In respect of the taxpayer the FTT noted that the taxpayer had well justified complaints about the manner in which his affairs had been handled. In respect of the UK population as a whole, because HMRC did not use the taxpayer's correct address and demonstrated a clear lack of rigour in getting to the bottom of what happened when they did not receive a completed tax return it appears that £16,519 of tax that should have been collected has not been collected.
Although it was not necessary for the FTT to decide this point, it raised the question as to how a taxpayer could resist a purported determination which he maintains was not validly made because he was not given notice under TMA 1970, s. 8 to complete a return. The FTT noted that there was no express right of appeal against a determination notice because it was assumed that the taxpayer's remedy is to displace the notice by filing a self-assessment return, which is what the taxpayer did in this case. But if the taxpayer chose not to take that course, but resisted enforcement of the determination notice, it appeared to the FTT that it would not have jurisdiction in respect of those enforcement proceedings. The FTT regarded that as being not particularly satisfactory.
[1] The Appellant, Alexander Revell, appeals against the decision taken on 10 December 2014 to close the enquiry into Mr Revell's self-assessment for the year 2008/2009 by making amendments to the return so as to increase the tax due for that year to £16,518.60.
[2] The dispute which is the subject of this appeal can be summarised as follows. The Respondents (HMRC) carried out a reconciliation of Mr Revell's PAYE records from his various employers over a number of years which showed an underpayment of a significant amount. Sometime later, HMRC sent a self-assessment return for the year ended 5 April 2009 to what it contended was Mr Revell's last known address.
[3] Mr Revell did not complete that return because he never received it. In the absence of a completed return, HMRC purported to issue a...
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