There is a case circulating on twitter and elsewhere, in respect of which various inaccurate views are being allowed to be held (in my opinion).
The case if that of Martin in the Upper Tier.
This reference is to a very good summary from Reynolds Porter Chamberlain.
Application directing HMRC to close its enquiry into tax avoidance scheme granted | RPC
The case discussed a couple of points that I will take in reverse order.
First, HMRC opened an enquiry and then did nothing. No letters, no questions, no contact. After three years the taxpayer applied for the enquiry to be closed.
This is achieved by HMRC issuing a closure notice.
A closure notice is simply HMRC saying that they have concluded their enquiry and the result is (usually) more tax is due.
The taxpayer can then challenge that view by going to a Tribunal.
In this case, HMRC attempted to ask some questions 3 years after the initial enquiry but the judge said that the taxpayers application for a closure notice should be granted.
The case does not say what that closure said. It does not say that HMRC decided more tax was due or if they closed the year with no adjustment.
All the taxpayer achieved was a situation in which HMRC could not longer ask questions. that may well harm a view from the agency that more tax is due (in fact I would say that this is a schoolboy error from HMRC and that a tribunal hearing the question of whether more tax could be due will almost certainly take into account the lack of information held by HMRC in reaching that decision).
However, the UTT case was not about whether a liability exists. Rather it was whether the closure notice should be issued.
Message is: A CLOSURE NOTICE ENDS AN ENQUIRY - IT DOES NOT MEAN THAT FURTHER TAX IS NOT DUE.
The second point was technical and around whether a enquiry into an individual can be opened/closed without impacting adjustments that may arise from an enquiry into a related business (in this case an LLP).
For me, this is more disturbing as the UTT said that this could happen. For me, this is akin to giving HMRC two bites of the cherry. I hope this is appealed, but I doubt it will be.
The case if that of Martin in the Upper Tier.
This reference is to a very good summary from Reynolds Porter Chamberlain.
Application directing HMRC to close its enquiry into tax avoidance scheme granted | RPC
The case discussed a couple of points that I will take in reverse order.
First, HMRC opened an enquiry and then did nothing. No letters, no questions, no contact. After three years the taxpayer applied for the enquiry to be closed.
This is achieved by HMRC issuing a closure notice.
A closure notice is simply HMRC saying that they have concluded their enquiry and the result is (usually) more tax is due.
The taxpayer can then challenge that view by going to a Tribunal.
In this case, HMRC attempted to ask some questions 3 years after the initial enquiry but the judge said that the taxpayers application for a closure notice should be granted.
The case does not say what that closure said. It does not say that HMRC decided more tax was due or if they closed the year with no adjustment.
All the taxpayer achieved was a situation in which HMRC could not longer ask questions. that may well harm a view from the agency that more tax is due (in fact I would say that this is a schoolboy error from HMRC and that a tribunal hearing the question of whether more tax could be due will almost certainly take into account the lack of information held by HMRC in reaching that decision).
However, the UTT case was not about whether a liability exists. Rather it was whether the closure notice should be issued.
Message is: A CLOSURE NOTICE ENDS AN ENQUIRY - IT DOES NOT MEAN THAT FURTHER TAX IS NOT DUE.
The second point was technical and around whether a enquiry into an individual can be opened/closed without impacting adjustments that may arise from an enquiry into a related business (in this case an LLP).
For me, this is more disturbing as the UTT said that this could happen. For me, this is akin to giving HMRC two bites of the cherry. I hope this is appealed, but I doubt it will be.
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