William Andrew Tinkler v The Commissioners for HM Revenue & Customs

JurisdictionEngland & Wales
JudgeLord Justice Hamblen,Sir Bernard Rix,Lord Justice McCombe
Judgment Date31 July 2019
Neutral Citation[2019] EWCA Civ 1392
CourtCourt of Appeal (Civil Division)
Docket NumberCase No: A3/2018/1260
Date31 July 2019
Between:
William Andrew Tinkler
Appellant
and
The Commissioners for Her Majesty's Revenue & Customs
Respondents

[2019] EWCA Civ 1392

Before:

Lord Justice McCombe

Lord Justice Hamblen

and

Sir Bernard Rix

Case No: A3/2018/1260

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE UPPER TRIBUNAL

(TAX AND CHANCERY CHAMBER)

JUDGE BERNER AND JUDGE SINFIELD

Appeal number UT/2015/0134

Royal Courts of Justice

Strand, London, WC2A 2LL

Roger Thomas QC and Emma Pearce (instructed by One Legal) for the Appellant

Michael Jones (instructed by the General Counsel and Solicitor to HM Revenue and Customs) for the Respondents

Hearing date: 16 & 17 July 2019

Approved Judgment

Lord Justice Hamblen

Introduction

1

This appeal concerns whether the Respondents (“HMRC”) gave a valid notice of enquiry under s.9A of the Taxes Management Act 1970 (“ TMA 1970”) to the Appellant, Mr Tinkler, of their intention to enquire into his 03/04 self-assessment tax return (“the Return”).

2

HMRC contend that valid notice was given by sending a copy of the notice to Mr Tinkler to his accountants, BDO Stoy Hayward LLP (“BDO”). The Upper Tribunal (“UT”) found for HMRC on this issue, reversing the decision of the FTT on this point. Mr Tinkler appeals from that decision.

3

Alternatively, HMRC contend that, if no valid notice was given, Mr Tinkler is estopped by convention from contending otherwise. The UT found against HMRC on this issue, reversing the decision of the FTT on this point. HMRC cross-appeal from that decision by Respondent's Notice.

The legal framework

4

Section 9A TMA 1970 relevantly provides:

9A. Notice of enquiry

(1) An officer of the Board may enquire into a return under section 8 or 8A of this Act if he gives notice of his intention to do so (“notice of enquiry”)—

(a) to the person whose return it is (“the taxpayer”),

(b) within the time allowed.

(2) The time allowed is—

(a) if the return was delivered on or before the filing date, up to the end of the period of twelve months after the filing date;

(3) A return which has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) of the return under section 9ZA of this Act.”

5

In the present case, in order to enquire into the Return HMRC had until 31 January 2006 to give a notice of enquiry under s.9A.

6

Section 115 TMA 1970 sets out how a notice of enquiry may be given:

S115 Delivery and service of documents

(1) A notice or form which is to be served under the Taxes Acts on a person may be either delivered to him or left at his usual or last known place of residence.

(2) Any notice or other document to be given, sent, served or delivered under the Taxes Acts may be served by post, and, if so given, sent, served or delivered to or on any person by the Board, by any officer of the Board, or by or on behalf of any body of Commissioners, may be so served addressed to that person –

(a) at his usual or last known place of residence, or his place of business or employment…”

7

The parties were agreed that notice could be given if it was sent to Mr Tinkler's usual or last known place of residence. HMRC purported to do so by sending the notice to Mr Tinkler at an address at Heybridge Lane, Cheshire (“Heybridge Lane”). The FTT found that this was not his usual or last known place of residence and that he never received the notice. This is no longer in issue.

Factual background

8

On 11 January 2005, Mr Tinkler signed an engagement letter (“the Engagement Letter”) with BDO, appointing the firm as his “tax agent and adviser”.

9

The Engagement Letter asked Mr Tinkler to sign and return a form published by HMRC, Form 64–8, which authorised HMRC (then the Inland Revenue) to communicate with BDO in certain circumstances regarding Mr Tinkler's tax affairs.

10

On 12 January 2005, BDO sent Mr Tinkler's completed Form 64–8 to HMRC. The Form 64–8 gave Mr Tinkler's address as Station Road, Appleby, Cumbria (“Station Road”).

11

On 31 January 2005, the Return was provided to HMRC. The Return showed Mr Tinkler's address as c/o WA Developments Int Ltd at the Station Road address.

12

On 1 July 2005, Mr Tinkler's address on HMRC's system was changed from Station Road to Heybridge Lane. The FTT found as follows in relation to this change of address:

“31. There was no evidence why this change was made but it is I find more likely than not that it was a change made or requested by Mr Mackay, as on the same day Mr Mackay opened or purported to open an enquiry into Mr Tinkler's return for tax year 2003/4. I also find it most likely Mr Mackay amended the TBS without any notification from Mr Tinkler or anyone acting on his behalf: as Heybridge Lane had ceased to be a residence of Mr Tinkler nearly a year before and even the lease had expired six months before, it is most unlikely anyone would give notification to HMRC that Heybridge Lane was still Mr Tinkler's address.

32. .…I accept the appellant's case that the change to the TBS system was made by Mr Mackay without any notification from, or discussions with, Mr Tinkler or anyone on his behalf”.

13

By a letter dated 1 July 2005 (“the Letter”) addressed to Mr Tinkler at Heybridge Lane, HMRC wrote purporting to inform Mr Tinkler that they “intended enquiring into” the Return. The letter was headed as a “Notice Under S9A Taxes Management Act 1970”. The officer stated that he was copying the letter to “your accountants BDO Stoy Hayward”. The FTT found that the letter arrived at Heybridge Lane, but that Mr Tinkler did not receive it because it was not forwarded on to him.

14

By a further letter dated 1 July 2005 (“the BDO Letter”), HMRC wrote to BDO stating that “I enclose for your information a copy of the S9A TMA 1970 notice, which has today been issued to your client” in respect of the Return. It attached a copy of the Letter, the version of which before the Court had the address crossed out and “Copy” written in manuscript. It also raised some questions about Capital Gains.

15

On 6 July 2005, BDO responded by letter and acknowledged receipt of the BDO Letter advising of HMRC's intention to enquire into the Return. The letter stated that BDO would respond to the questions raised in relation to Capital Gains in due course. It also referred to a Gilt Strip loss which had mistakenly not been included in the Return, but pointed out that the Return could not be amended “as the Return is now the subject of a s9A TMA 1970 enquiry”. A repayment was nevertheless sought in relation to the loss.

16

HMRC responded by letter dated 12 July 2005, noting the Gilt Strip loss claimed but saying that “no repayment will be made until after the enquiry is concluded”.

17

HMRC chased the Capital Gains information requested by letter and by telephone and the request was responded to by a letter from BDO on 24 November 2005.

18

On 30 August 2012, HMRC issued a Closure Notice to Mr Tinkler in respect of the Return, purporting to amend the Return and to disallow certain losses claimed by Mr Tinkler. Mr Tinkler appealed to the FTT.

19

In addition to the arguments made in respect of his substantive appeal, Mr Tinkler contended that there was a preliminary issue determinative of that appeal, namely that HMRC had failed to give him a valid notice of enquiry and that the Closure Notice and its conclusions were therefore also invalid. The FTT directed that this preliminary issue be heard separately, followed (if necessary) by the substantive appeal.

The tribunal decisions

20

Following a hearing on 14–15 December 2015, in a decision promulgated on 9 March 2016, the FTT reached the following conclusions material to the appeal:

(1) Notice of enquiry to a taxpayer is validly given if received by his agent, provided that the agent has actual or apparent authority to receive notices on behalf of the principal.

(2) BDO did not have apparent or actual authority to receive a notice of enquiry on Mr Tinkler's behalf.

(3) An estoppel by convention had arisen which prevented Mr Tinkler from arguing the preliminary issue and it would be unconscionable for Mr Tinkler to go back on the shared mistaken assumption and deny that HMRC had opened a valid enquiry.

21

Mr Tinkler appealed to the UT in relation to conclusions (1) and (3). HMRC issued a Respondent's Notice in relation to conclusion (2).

22

The UT upheld the FTT's conclusion (1), but otherwise reached different conclusions. The result was that the decision of the FTT was upheld on the sole ground that notice of enquiry had been received by Mr Tinkler's duly authorised agent, BDO.

23

The UT gave Mr Tinkler permission to appeal against its decision. HMRC has issued a Respondent's Notice seeking, if necessary, to uphold the decision on the grounds that the UT should have held that there was an estoppel by convention, as the FTT had found.

The issues on the appeal

24

The issues are:

(1) Whether valid notice of a s.9A enquiry was given by the copy notice sent to BDO in the BDO Letter – Issue (1).

(2) If not, whether Mr Tinkler is estopped by convention from denying that HMRC had opened a valid enquiry – Issue (2).

Whether valid notice of a s.9A enquiry was given by the copy notice sent to BDO in the BDO Letter.

25

Mr Tinkler disputes that valid notice was given on three grounds:

(1) BDO did not have actual or apparent authority to receive a notice of enquiry on Mr Tinkler's behalf – ground (i).

(2) Even if BDO had such authority, notice under s.9A must be given to the “taxpayer” and cannot be given to an agent, absent an express agreement with HMRC – ground (ii).

(3) Even if notice could be given to an authorised agent, notice was not validly given as the copy notice provided to BDO for information purposes did not purport to be and was not a s.9A notice – ground (iii).

26

I shall address ground (i) and the issue of authority...

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