Tim Norton Motor Services Ltd & Anor v Revenue & Customs (INCOME TAX AND NICs - benefits in kind) [2020] UKFTT 503 (TC)

FTT-Tax
Tim Norton Motor Services Ltd & Anor v Revenue & Customs (INCOME TAX AND NICs - benefits in kind)
[2020] UKFTT 503 (TC) · 2020-10-27
[27]The Upper Tribunal put the point as follows (§ 23):
"The phrase "he shall not be assessed", as it is used in s 29, means "he shall not be validly assessed"
. Accordingly, if one or both of the conditions is fulfilled, the assessment is valid; if neither of them is fulfilled, the assessment is invalid. The subjective opinions of the assessing officer or the Board about fulfilment of the conditions have no part to play in the operation of s 29. We consider this to be the only conclusion consistent with sub-s (8): the subject matter of an appeal is whether or not either of the conditions is fulfilled, without any form of qualification. If neither is fulfilled, the assessment should not have been made and will be invalid. And that is so whether the officer had formed the view that the conditions were fulfilled (and turns out to be wrong) or whether he has not considered them at all. The protection for the taxpayer in either case is his right of appeal under sub-s (8)."[28]I agree . I agree also with the FTT's alternative way of putting the point (§ 97): "We think that the words "the taxpayer shall not be assessed under that sub-section" in s 29(2) and the corresponding words "he shall not be assessed under sub-section (1) above" in s 29(3) do not mean that the officer is precluded from making a discovery assessment in the first instance; the words provide a means of testing whether the safeguards set out in s 29(2) to (5) preclude the assessment from taking effect in the taxpayer's particular circumstances…"135. Hankinson concerned the question of whether a discovery assessment was valid only if the inspector had considered the operation of subsections (4) and (5). Although this judgement expressly described the operation of the enquiry system, there was no consideration of the argument Mr Gordon advances. It cannot, I think, be said that the passage Mr Vallis quotes is determinative of the issue.136. However, I agree with Mr Vallis that there is nothing express in the words of section 29 which indicate Mr Gordon’s conclusion.137. I accept that usually one would expect HMRC to avail itself of the power to open an enquiry rather than making an assessment. The condition in section 29(5) gives rise to some difficulty if an assessment is made during an enquiry window because the condition relates to the knowledge of the inspector when that window closes, which would in such a case be determined at a time after the issue of the assessment and between the time of issue of the assessment and the closure of the window new information may be gleaned from the prescribed sources which could at that time of the closure of the window make the inspector aware of the deficiency. And if an enquiry is opened the period for the receipt of additional information would be extended still further. Thus if a discovery assessment is made during the enquiry window or during an enquiry the consideration of the legality of the assessment must be postponed until the window or enquiry has closed.138. That would permit the retrospective voidance of an assessment made during the window if a taxpayer notifies the inspector in writing with the information which would enable him to come to the conclusion which gave rise to the assessment (see s 29(6)(d)(ii). That may present HMRC with procedural problems and may make it more difficult for a tribunal to deal with and in an appeal against a discovery assessment before the end of the relevant window, but the difficulty visited upon HMRC will be one of their own making because they could have opened an enquiry or given a partial closure notice during an enquiry, and the tribunal will in my view be able to manage an appeal to take account of the timing issues. It does not seem to me that the difficulties created are such that it is necessary to construe section 29 as prohibiting assessment within the relevant window or as imposing conditions in addition to those described by Lewison J.139. I conclude (in respectful disagreement with the Special Commissioner in Lee ) that the fact that the assessment was made during the enquiry window at a time when an enquiry could have been opened does not invalidate that assessment. (3) section 29 (2) generally prevailing practice.140. A taxpayer is not to be assessed under section 29 if his return was made on the (mistaken) basis of, or (mistakenly) in accordance with, practice generally prevailing at the time the return was made.141. I have recorded a letter whichi was sent by the company's advisers to the Inland Revenue in 2002 asking for guidance as to how to work out the benefit of the Maserati for tax purposes. The Inland Revenue replied: “…You state that a vehicle is used occasionally for private journeys by one of the directors. This would suggest that the vehicle, or one of several vehicles, must be available for the director’s private use. As I am sure you are well aware, this in itself is all that is required for a car benefit to arise under section 157 ICTA 1988. “…The taxable benefit would therefore be calculated by reference to the availability of the vehicle in question. Unless there are any specific times when the director does not have the vehicle available for his private use then the benefit will be based on a full year’s availability. Otherwise the benefit charge may be arrived at on a pro-rata basis as appropriate.”142. On the basis of this reply Mr Gordon says that the company declared (and Mr Norton returned) benefits calculated only by reference to the periods in Mr Norton had actually used the cars. (It seems to me that this was, at best, a very optimistic view of this letter.)143. In 2007 HMRC made a PAYE inspection and no issues were raised in relation to the reporting of the benefit of the Maserati.144. In 2001 an article in Taxation magazine reported an appeal to the General Commissioners against an Inland Revenue decision that a car was available to a director. The director, after suffering a heart attack, had given instructions to amend the car insurance to third party, fire and theft only, and had surrendered his driving licence. The taxpayer's argument was that in these actions he had made the car unavailable. The General Commissioners allowed the appeal. There was no further appeal by the Inland Revenue.145. Mr Gordon notes that the Revenue did not appeal the decision and he says that that suggested that this was because they had changed their practice on the meaning of "made available" in (the predecessor of) section 114, so that treating a car as not being available when vehicle excise duty had not been paid was consistent with that policy (and so was like driving without a licence).146. When Mr Earl wrote to the company on 8 June 2016 he said: “It is my contention from the records seen that both vehicles have valid MOT certificates and were insured for Mr Norton’s use at all times, and that whenever Mr Norton has chosen to use either vehicle, he has obtained the appropriate road tax to enable this use, presumably by the online method which is more or less instantaneous. For this reason, it is my opinion that both vehicles have been and remain available for Mr Norton’s private use at all times.”147. Mr Gordon says that the clear implication of this passage is that Mr Earl recognised that if use was illegal (because of his example lack of of insurance and MOT) the car was not available, and this reflected the generally prevailing practice at that time.148. Taking these matters together Mr Gordon argues that they show that at the time of Mr Norton's returns there was a generally prevailing practice that if it was illegal to use a car, the car would not be treated as available and so as not made available.149. In HMRC v Household Estate Agents Ltd [2008] STC 2045 , Henderson J considered the effect of words similar to those in section 29(2) in paragraph 45 schedule 18 FA 1998. He held that the burden of proof lay on the taxpayer, and in relation to the meaning of "practice generally prevailing" he said this at [58]:[58]"Without attempting to give an exhaustive definition, it seems to me that a practice may be so described only if it is relatively long established, readily ascertainable by interested parties, and accepted by HMRC and taxpayers' advisers alike : compare the decision of the Special Commissioners (Dr A N Brice and Mr John Walters QC) in Rafferty v HMRC [2005] STC (SCD) 484 at paragraph 114 .)" 150. In Rafferty, where the applicability if section 29(2) had been at issue, the Commissioners had said at [114]:[114]“We construe section 29(2) as a protection to the taxpayer from an assessment where the Revenue have changed their mind on a doubtful point in a sense adverse to the taxpayer. It would in our judgment go too far to construe it, as Mr Goldberg urged us to do, as a bar on the Revenue from raising a discovery assessment in particular circumstances where they had not publicly adopted a practice. We agree that a practice generally prevailing has to be a practice, or agreement, or acceptance over a long period whereby the Revenue agreed or accepted a certain treatment of sums in particular circumstances. ” 151. In Boyer Alan Investment Services Ltd v HMRC [2012] UK FTT 558 , a case relating to section 29(2), Judge Berner gave further consideration to the elements identified by Henderson J in Household Estate Agents. He said:(1) to be ascertainable required that the practice was not inchoate and that it be sufficiently precise and devoid of uncertainty in its application [34];(2) although a published statement of practice was the paradigm of an ascertainable practice, it was possible for a practice to be ascertainable if settled, defined and agreed between, or communicated between, taxpayers or otherwise sufficiently identified to the outside world [35];(3) a published practice was likely to be capable of being regarded as having become generally prevailing over a shorter period than one merely established in practice [36];(4) an internal practice of HMRC would not be generally prevailing until it could be identified with reasonable clarity and precision by taxpayers [37];(5) that quality of clarity and precision must be present in the understanding of HMRC and taxpayers alike [38];(6) in order for the practice to be "generally" prevailing it must have been adopted by HMRC and generally, but not universally, by the taxpayer community [38];(7) the practice would not be settled if it was not applied in a consistent manner. 152. I do not consider that the difference in context between Sch 18 FA98 and section 29(2) TMA indicates that a different meaning should be given to generally accepted practice in the two provisions– and Henderson J’s reference to Rafferty indicates that he too thought they had the same import. The paraphrase in Rafferty and the more detailed exposition in Boyer seem to me to reflect the requirements to be satisfied before this provision can prevent an assessment. And, for the reasons given by Henderson J, I find that the burden of proof in showing that the conditions for the relief are met falls on he who asserts their satisfaction, namely the taxpayer. 153. In this case I do not think that the material produced by the Appellants meets the test: (1) the Taxation article did not clearly evidence a precisely articulated practice of the Revenue: it was uncertain why no appeal had been made, it was not clear that there had been acceptance of a practice under which any legal impediment to use precluded availability; (2) the 2001 reply from the Revenue to the accountant’s query did not in terms accept that availability was precluded by unlawfulness of use; indeed the terms of the reply left open the question of when the director would have the vehicle available; (3) the fact that no problem had been identified in the 2007 PAYE audit would only be evidence of some form of practice if there were evidence that the use of the cars had been considered. There was not such evidence. Even if there had been such evidence it would not indicate that a practice was generally applied. And there was no evidence that the practice was applied by taxpayers more generally; and (4) Mr Earl’s letter of 8 June 2016 says expressly that he considers that lack of vehicle excise duty does not preclude availability. It is not possible to reconcile that with any form of acknowledgement that there was a practice by virtue of which illegality of road use always precluded availability or that a SORN would do so. I conclude that section 29(2) does not avail Mr Norton (ii) the 2015/16 closure notice. 154. In relation to 2015/16 Mr Gordon contends that there was no valid enquiry and no legitimate closure notice. Any purported closure notice should be set aside. He so contends for the following reasons: (1) a closure notice may be issued only if an enquiry has been opened (section 28A TMA); (2) an enquiry may be opened only if the taxpayer has made a return "under section 8 TMA” (section 9A TMA); (3) a return is made under section 8 TMA only if the taxpayer is required to make one "by notice given to him by an officer of the Board", and (4) no such notice was shown by HMRC to have been given. 155. This argument is complicated by the later enactment of section 87 Finance Act 2019 and section 103 Finance Act 2020, both of which have some retrospective effect. I shall start with the position that would have obtained if these two provisions had not been enacted. 156. It Patel & Patel v HMRC the FTT held that a return sent to HMRC otherwise than in response to section 8 notice (a "voluntary return") did not engage the provisions enabling enquiries and penalties because those provisions were expressly dependent upon a "return made under section 8". 157. Section 8 refers to a notice given to the taxpayer “by an officer of the Board”. Following a number of decisions of the FTT which held that a notice under section 8 had to be given by a flesh and blood officer (so that where it was not shown it was so given the purported notice did not have effect), the Upper Tribunal held in HMRC v Rogers [2020] STC 220 that:
“Properly construed, s 8 TMA did not impose a requirement that an officer of the Board was identified in the notice as the giver of the notice. Rather, it imposed a substantive requirement that the giving of a notice had to have been under the authority of an officer of HMR C. The requirement was that whoever required the notice to be given, whether identified or not, had the status of an HMRC officer. The statutory scheme did not justify the approach that a s 8 notice had to be given by an identified ‘flesh and blood’ officer. [my italics] 158. In proceedings in which HMRC's position depends upon a section 8 notice having been so given, the burden will be on HMRC to show that such is the case. In relation to the penalty provisions the Upper Tribunal said in Rogers : [50] It follows that, if HMRC fail to provide any evidence at all to the effect that a s 8 notice was served, they will have failed to demonstrate a crucial fact on which their entitlement to a penalty hinges and the FTT will necessarily set aside the penalties charged for alleged failure to comply with that notice. [51] Where HMRC have given some evidence that a s 8 notice was served, it will then be a matter for the FTT to determine whether that evidence is sufficiently strong to discharge HMRC’s burden of proof. The FTT’s assessment of the evidence should take into account the extent to which the taxpayer is disputing receiving a s 8 notice. Evidence to the effect that HMRC’s systems record a s 8 notice as having been sent is, on its own, relatively weak evidence (since it does not itself demonstrate that a s 8 notice was actually sent, and may not itself demonstrate the address to which it was sent). However, the FTT may nevertheless regard such evidence as sufficient if the taxpayer is not disputing having received a notice to file. By contrast, as the Upper Tribunal (Nugee J and Judge Herrington) identified at [56] of Edwards v Revenue and Customs Comrs [2019] UKUT 131 (TCC) , [2019] STC 1620 if the taxpayer is disputing having received a notice, the Tribunal is unlikely to accept weak evidence consisting only of a record that HMRC’s systems record a s 8 notice as having been sent to an unspecified address. In such a case, the Tribunal may look for further corroborating evidence: for example evidence that a s 8 notice was actually sent to the taxpayer at the correct address or evidence that the taxpayer set about trying to submit a tax return before the deadline, from which it might be inferred that the taxpayer had received a notice requiring him or her to do so. 159. That was in relation to whether or not a section 8 notice had been served, but clearly the same conclusions apply to the issue of whether the notice was in fact given by or under the authority of an officer. In this appeal on HMRC provided a copy of a print out bearing HMRC’s logo which contained inter-alia the following: "tax year: 2015/16 ... return issued date: 06/04/2016; ... date of receipt: 30/12/2006 ..." but contained no record of the involvement of any HMRC officer. 160. Although he casts some doubt on the accuracy of the document Mr Gordon does not say that no notice was received by Mr Norton, but he says that HMRC have not shown that the notice was given "under the authority of an officer of HMRC". This he says HMRC could surely have done by producing a witness statements from an officer who said, for example, "I instructed someone to program the computer so that notices were sent to people like Mr Norton". Without such evidence how was the tribunal to find that the programming was not done on the whim of a contractor who was not an officer, or that the dispatch of the notice was intended, rather than being the result of a software malfunction or mistake made by such a contractor? 161. Mr Vallis argued that the record of the notice must mean that someone in HMRC authorised its issue: HMRC would not allow, he said, the system to record what had not been authorised. He accepted that the record of the date of issue was a bit dodgy since "06/04/" was shown as the date the return was sent for almost all such records, when it was the case that returns were in fact sent out in batches on dates after 6 April, but that did not prevent it from being evidence of authorisation by an officer. He referred me to Paul at [81] where the judge addressed the issue of whether there was evidence to show that notices had been issued by HMRC rather than someone else (or someone else's computer) and said: “This is a difficult point but on balance I reject this argument. I am satisfied on the evidence that the notices were issued “by HMRC”
. Ms Wilton exhibited to her supplemental witness statement the microfiche records showing the notices had been issued to the appellant. Rogers & Shaw was concerned with wider issues which no longer apply following the enactment of section 103. Following the enactment of section 103 it would be excessive, as inferred by the appellant, that HMRC should each time a section 8 notice is challenged be required to produce evidence as to the ownership of the computer generating section 8 notices. In my view the notices were generated “by HMRC” as required.” 162. That was in the context of section 103, to which we shall return later, but Mr Vallis asks me to apply the same approach in this appeal. HMRC should be trusted he says. 163. I have sympathy with the reasons set out in that decision, but I do not think that it is a fair approach If a relevant factual assertion is not challenged then, in general ,it may not be unfair to make a finding of a necessary fact on the basis of very weak evidence, but where the matter is challenged it is not excessive to require persuasive evidence before reaching a conclusion. Fairness between a taxpayer and HMRC is not achieved by saying that one party does not have to provide convincing evidence prove that something is likely to be true when the onus is on them to do so, when the other party would have to do that in relation to something else. The fact that in other cases the same proof would be required is, as between the parties to an appeal, not relevant. 164. In this case the notice of appeal said that so far as any closure notice was concerned HMRC were put to strict proof to demonstrate that there was a “valid s9A notice in relation to a return made under TMA s8”. It seems to me that that language puts in to question the validity of any such notice as well as its service. In my view it creates an onus on HMRC to show some evidence which permits the conclusion that it is likely that the notice was issued under the authority of an officer. 165. I agree with Mr Gordon. The document produced by HMRC did not dispel the doubts he cast on the matter required to be proved. I find that it was not shown that the notice was issued under the authority of an officer of HMRC. 166. As a result, ignoring at this stage section 87 and 103, I find that no section 8 notice was shown to be given, no enquiry could therefore have been opened, and any purported closure notice was of no effect. Section 103. 167. Mr Vallis seeks to avoid this conclusion by relying on section 103 FA 2020. This provides: 103 HMRC: exercise of officer functions (1) Anything capable of being done by an officer of Revenue and Customs by virtue of a function conferred by or under an enactment relating to taxation may be done by HMRC (whether by means involving the use of a computer or otherwise). (2) Accordingly, it follows that HMRC may (among other things)— (a) give a notice under section 8, 8A or 12AA of TMA 1970 (notice to file personal, trustee or partnership return); … (3) Anything done by HMRC in accordance with subsection (1) has the same effect as it would have if done by an officer of Revenue and Customs (or, where the function is conferred on an officer of a particular kind, an officer of that kind). (4) In this section— “HMRC” means Her Majesty’s Revenue and Customs; references to an officer of Revenue and Customs include an officer of a particular kind, such as an officer authorised for the purposes of an enactment. (5) This section is treated as always having been in force. (6) [contains transitional provision not relevant to this appeal]” 168. Mr Vallis says that as a result of the retrospective nature of this provision there is no requirement in relation to the section 8 notice for 2015/60 that it should have been given by an individual officer; the only requirement is that HMRC, as opposed to some other authority, gave it. That could involve the use of a computer. Given that the printout summary records the issue of the notice it is clear that the notice was given by HMRC. 169. Mr Gordon says "HMRC" is not an amorphous concept but is defined by virtue of section 5 and Schedule 1 Interpretation Act1978 by virtue of section 4 Revenue and Customs Act 2005. Those provisions are as follows: Commissioners for Revenue and Customs Act 2005 4 “Her Majesty’s Revenue and Customs” (1) The Commissioners and the officers of Revenue and Customs may together be referred to as Her Majesty’s Revenue and Customs. (2) The Welsh title of the Commissioners and the officers of Revenue and Customs together shall be Cyllid a Thollau Ei Mawrhydi. (3) In Schedule 1 to the Interpretation Act 1978 (defined expressions) at the appropriate place insert— ““Her Majesty’s Revenue and Customs” has the meaning given by section 4 of the Commissioners for Revenue and Customs Act 2005.” Interpretation Act 1978 “5. Definitions In any Act, unless the contrary intention appears, words and expressions listed in Schedule 1 to this Act are to be construed according to that schedule.” 170. Mr Gordon says that, in short "HMRC" means the Commissioners and officers of HMRC: human resources. The process of the issue of a section 8 notice must remain the subject of human supervision. 171. Mr Vallis argues that a contrary intention appears in section 103, and that what is meant by “HMRC” in section 103 is HMRC as a body corporate and that may take the place of an individual officer in any relevant provision. 172. In Wyatt Paul v HMRC TC/2018/2850 the tribunal said: 73. It is common ground that the requirement in Rogers & Shaw that “ whoever requires the notice to be given, whether identified or not, has the status of an HMRC officer ” ( Rogers & Shaw at [32]) is overridden by section 103 Finance Act 2020 in that section 103 provides that any function to be carried out by an off icer “ may be done by HMRC (whether by means involving the use of a computer or otherwise) ”. 74. The appellant seeks to limit the application of section 103 by reading into the requirement that the function “ may be done by HMRC ” as still requiring human intervention, that is to say individuals in HMRC, not necessarily officers. I disagree. The natural meaning of the wording in section 103 is to allow something to be done by HMRC as a body, including automating processes that previously required something to be done by an officer of HMRC, being in the current appeal the issue of section 8 notices. Provided that process is carried out “by HMRC” (which, without exploring the limits of artificial intelligence, must necessarily involve human intervention to programme the computer to issue the notices on the occurrence of certain events) it is valid, even without the identifiable authority of an identifiable human. 173. It seems to me that the words in parentheses in this passage are, for the reasons which follow, its logical destruction. 174. I prefer Mr Gordon’s view of the effect of section 103 because I see no contrary intention in that section. But even if Mr Vallis is right, the question remains: what evidence is there that the notice was issued by or under the authority of HMRC? Mr Vallis exhibits the print out, but that does not answer the question: under what authority was the action recorded in it taken? It records merely that an action was taken. Even the issue of whether the document is an HMRC record is unclear - as any recipient of spoof emails bearing HMRC’s logo and offering tax refunds will know. Bodies corporate act through people. HMRC as a body corporate can only do something if some one or more individuals puts it in chain. The question which requires evidence is whether a person or persons of HMRC authorised the system which created the record and the issue of the notice apparently recorded in it. 175. The evidence before me - the return summary - does not in my view provide evidence of such supervisory authority. It fails to meet the concerns expressed above. Accordingly, I do not consider that section 103 avails Mr Vallis. Section 87 FA 2019 (section 12D TMA 1970). 176. This introduced a new section, 12D, into TMA. Its object was to legitimise HMRC's practice of treating voluntary returns as having been made pursuant to a notice under section 8. Section 12D was introduced with retrospective effect but is subject to transitional provisions in subsection (4) to which I shall return later. 177. Section 12D provides that:
“( 1) This section applies where- ( a ) a person delivers a purported return (the relevant return) under section 8, 8A or 12AA (the relevant section) for a year of assessment or other period (the relevant period), ( b ) no notice under the relevant section has been given to the person in respect of the relevant period, and ( c ) HMRC treats the relevant return as a return made and delivered in pursuance of such a notice. (2) For the purposes of the Taxes Acts- (a) treat a relevant notice as having been given to the person on the day the relevant return was delivered, and (b) treat the relevant return as having been made and delivered in pursuance of that notice (and, accordingly, treat it as if it were a return under the relevant section). [subsections (3) and (4) define purported notice and relevant notice square] 178. Mr Vallis argues that if Mr Norton's 2015/16 return was not shown to have been made under section 8 because no valid section 8 notice was shown to have been given, then section 12D saves the day: it treats the return as made under section 8 with the result that an enquiry could be opened - and was opened - and any closure notice issued in relation to such an enquiry was valid and effective. 179. Mr Gordon says that whilst in section 12D validates a voluntary return, it does not retrospectively validate a purported enquiry into such a return which was opened before section 87 was enacted (12 February 2019). He says that by deeming a section 8 notice to have been served Parliament has from that date allowed enquiries to be opened prospectively into such voluntary returns, but stopped short of turning previous correspondence into a legitimate enquiry/closure notice. Parliament's choice of language - deeming a section 8 notice to have been given rather than deeming the return to have been in response to such a notice indicates that the deeming effect was intended to be limited simply to validating the voluntary return. He points to anomalies which he says the rise if section 12D is construed to have the effect that a previously ineffective purported enquiry is converted into a lawful one. 180. This argument was rejected by the FTT in Allam v HMRC [2020] UK FTT 26 (TC) , which Mr Gordon told me is being appealed to the Upper Tribunal. 181. I agree with the reasoning and conclusions of the FTT in that case and, in the light of the forthcoming appeal to the Upper Tribunal, no purpose would be served by setting them out in detail here. But Mr Gordon made a number of comments on that decision which I should address. 182. The first related to the FTT's conclusions in [53] and 76] of its decision. The FTT, having considered the approach to deeming provisions and the relevance, context and content of Parliamentary material, said at [53] that section 12D: "should apply to treat...returns...made before 12 February 2019 which were not made in response to a notice under section 8 TMA as returns made in response to [such a notice] and so as made under section 8 TMA for the purposes of section 9 a TMA." 183. The FTT then [54 to 62] set out its three reasons for that conclusion, namely, that such: was the ordinary and natural meaning of the words, assisted with the purpose of the provision and was a natural consequence of the deeming provision. Finally [63 to 76] it considered three anomalies which the appellant had argued arose on that interpretation. It then concluded at [76] that: "the deeming rule in section 12D should apply to treat [the voluntary returns as] made in response to a relevant notice and so as made under section 8 TMA for the purposes of section 9A TMA. 184. Mr Gordon says that the language of the conclusions in [53] and [76] misses the point: there is a difference between treating a voluntary return made before 12 February 2019 as made under section 8 so that after 12 February 2019 an enquiry may validly be started, and the wider interpretation of treating such a return as made under section 8 so that an unlawful enquiry made before 12 February 2019 is to be treated as valid. The FTT’s conclusions are apposite only to the first interpretation. 185. I do not think that this is a fair reading of the decision. The conclusion that [53] follows a paragraph in which the second wider interpretation is described, and the conclusion at [53] is plainly to my mind intended to affirm that interpretation as may be seen from the reasons which follow. Likewise the conclusion that [76] follows a discussion of anomalies which were said to rise if the wider interpretation were adopted and is plainly meant to affirm that wider interpretation. 186. The second leg of Mr Gordon's attack on the decision in Allam relates to the anomalies or absurdities that he says will arise if the wider interpretation is adopted. The existence of such anomalies or absurdities flowing from the consequences of a deeming provision make an interpretation which extends to those consequences untenable unless it lies within the purpose of the deeming provision. 187. Mr Gordon's first example is of a voluntary tax return submitted on 1 January 2009 in respect of which HMRC purported to open a section 9A enquiry on 25 January 2009. That enquiry would have been invalid. The wider interpretation of section 12D would validate that enquiry. And thus the enquiry he says, would be found to be open 10 years after the event. That he says could not have been intended. 188. Mr Gordon contrasts that situation with a voluntary tax return submitted on 1 January 2019 in relation to which HMRC purported to open an enquiry on 25 January 2019 (before 12 February 2019 the day on which section 12D came into force). The enquiry would have been invalid, but from 25 January 2019 HMRC would be able lawfully to open an enquiry if they did so before 1 January 2020. There he says no injustice arises. 189. To my mind the situation in the 2009 example is precisely what was intended. In all likelihood, the “purported” enquiry would have continued for perhaps a few years and resulted in a closure notice, perhaps adjusting up, or down, the self-assessed tax. The wider interpretation treats that adjustment as effective confirming what it is likely that all the parties thought at the time. That is not an absurd result. 190. Mr Gordon's second example (which was also considered by the FTT in Allam [65 to 66]) relates to the provision in section 9A which, if the return is late, extends enquiry window to the end of the quarter one year after the return is made. 191. Under this provision a return made pursuant to a valid section 8 notice on 31 January 2019 may be subject to an enquiry within 12 months, but one made late, on 1 February 2019, will be subject to enquiry up to 30 April 2020 (section 9 (2)(b)). But the effect of section 12D is that a voluntary return is never late (because it is delivered on the same day as the section 8 notice is treated as being delivered). Thus the enquiry window for a voluntary return is always only 12 months long. As a result an enquiry purported to be opened into a voluntary return after the expiry of 12 months (but within the extended period) would be (and will remain) invalid. 192. This result he says cannot have been intended if Parliament had wanted in section 12D to validate enquiries rather than simply returns. He says it also means that "late filers would be treated more favourably than prompt filers". 193. I accept that the legislation has the effect that enquiries opened in the extension of the window are invalid. But opening an enquiry in such a period is dependent on the return being late, and a voluntary return is never made late because no legislative time limit was applicable at the time it was made. That is consistent with the provision in section 12D that the notice under section 8 is deemed to be given on the day the return is received - a recognition that the return was not late. It does not therefore seem to me that either this example points away from a Parliamentary intention to validate section 9A enquiries or gives rise to anomalies favouring "late" filers. 194. I conclude that in applying the deeming of section 12D "for all purposes of the Taxes Acts" the intention and the effect of the provision was to validate enquiries into section 9A voluntary returns that were opened before 12 February 2019 and within the window which would have been applicable at the time for a return made in accordance with a section 8 notice. As a result it validates the results of such enquiries. 195. Therefore if section 12D applies the opening of the enquiry into Mr Norton’s 2015/16 return and any consequent closure notice were valid. Does section 12D apply - the transitional provisions in section 87(4). 196. Subsections 87(3) and (4) provide: - “(3) The amendments made by this section are treated as always having been in force. (4) However, those amendments do not apply in relation to a purported return delivered by a person if, before 29 October 2018— (a) the person made an appeal under the Taxes Acts, or a claim for judicial review, and (b) the ground (or one of the grounds) for the making of the appeal or claim was that the purported return was not a return under section 8, 8A or 12AA of TMA 1970 or paragraph 3 of Schedule 18.” 197. HMRC say that Mr Norton cannot rely on section 87(4) because he did not make an appeal against a closure notice before 29 October 2018, and that if there is a document which could be construed as such an appeal it does not meet the conditions in subsection (4). They say the relevant closure notice was issued on 29 April 2019. 198. Mr Gordon says that the closure ntoice was issued on 20 March 2013 and an appeal made on 30 March 2017 199. In order to address the effect of these provisions and those arguments I must make some further findings of fact. I find that: (1) Mr Norton's 2015/16 return was received by HMRC on 30 December 2016. (2) Mrs Stent said she was opening an enquiry into the return on 27 January 2017. (3) On 20 March 2017 Mrs Stent wrote to say that information obtained by Mr Earl "suggested" that the declared benefit was incorrect. She continued: "I have recalculated your client’s tax liability using a revised figure in relation to car benefits and this has resulted in additional tax being due. "In order to protect the position of HM Revenue & Customs, I have raised an assessment for the tax years ended 5 April 2013 to 2015 and amended the tax return for the year ended 5 April 2016 . [my italics] "I have ... informally suspended collection ...". (4) On 30 March 2017 Mr Dewey of J & G wrote to HMRC and said “I wish to lodge an appeal against ... the adjustment for the tax year 2015/16". (5) On 5 October 2018 the tribunal received a notice of appeal from Mr Norton in which ground of appeal number 2 was: "2. So far as any closure notice is concerned HMRC are put to strict proof to demonstrate that there was a valid section 9A notice in relation to a return made under section TMA section 8." (6) HMRC's statement of case dated 10 January 2019 indicated (at paragraph 24) that HMRC contended that they correctly issued a section 8 notice and are "perplexed by the suggestion that they did not have the right to enquire". (7) On 18 February 2019 Mr Dewing e-mailed HMRC and said in the last paragraph of his letter: "furthermore, we have been advised of a new argument which we wish to employ in relation to the 2015/16 year. We wish HMRC to demonstrate the enquiry was validly opened ... [we believe] the tax return was submitted in response to an automated notice ... [and was] voluntary ... we do not consider a section 12D has the effect of retrospectively validating a non-existent enquiry." (8) On 29 April 2019 Mrs Stent wrote to Mr Norton saying "I have now completed my check of your self-assessment. This letter is a final closure notice under section 28. “... my decision ... the amount you declared was understated ... I have amended your tax return in line with my decision." (9) On 7 May 2019 Mr Norton sent the tribunal a (second) notice of appeal in which ground 1 was: - "HMRC are put to strict proof to demonstrate that the purported closure notice corresponds with a valid section 9A notice which in turn relates to a return made in reply to a notice given by an officer under TMA section 8." 200. In his skeleton argument Mr Gordon says (paragraphs 58(e) to (g)) that as HMRC’s statement of case did not fully address the section 8 ground of appeal, a clarification was sought on 18 February 2019. I take this to refer to (7) above; he says that the point was raised again on 22 March 2019: I could not find this in the bundles; and that in a response of 29 March 2019 (at SB/A20) HMRC newly asserted that the 20 March letter was not a closure notice: I did not find this response there in the bundles. I accept, however, that these steps took place. 201. HMRC now assert that the letter of 29 April 2019 was the closure notice for the 2015/16 enquiry. They did not originally think so - their statement of case reveals that they, like the taxpayer appeared to, thought that Mrs Stent’s letter of 20 March was the closure notice for the enquiry. 202. The questions which arise from this are: - (i) was Mrs Stent's letter of 20 March 2017 a closure notice? If it was then the appeal against it was made on 30 March 2017 or 5 October 2017 and section 87(4)(a) is satisfied because the appeal was made before 29 October 2018; and (ii) if it was a closure notice (so that the 5 October 2017 notice of appeal was an appeal against it), was there a ground of appeal that "the purported return was not a return under section 8 ... TMA 1970 ... because no relevant notice was given" so that section 87(4)(b) would be satisfied. 203. If the answer to both these questions is "yes" then the effect of section 87(4) is that section 12D TMA is to be ignored. If on the other hand, Mrs Stent’s letter of 20 March 2017 was not a closure notice, then her letter of 29 April 2019 was one. In that case the appeal, having been made on 7 May 2019, would not satisfy section 87(4)(a) and section 12D will apply. (i) Was the 20 March 2017 letter a closure notice? 204. Section 28A TMA provides that an enquiry is completed when an officer informs the taxpayer by a closure notice that she has completed her enquiries. Section 28A(2) provides that the closure notice must “make the amendments of the return required to give effect to [those] conclusions". In Raftopoulou v HMRC the Court of Appeal said that a closure notice was part of a formal procedure and must “(i) state that the officer has completed his inquiries, (ii) state his conclusions, and (iii) amend the claim as the officer concludes to be necessary or state that no amendment is required.” 205. A closure notice triggers the ability of a taxpayer to appeal and starts the clock running for an appeal. If no appeal is made it may trigger an additional tax liability of the taxpayer. It is important that such a notice is recognisable; the formalities of section 28A enable it to be so. 206. I am not persuaded that Mrs Stent’s letter of 20 March 2017 satisfies these requirements. I accept that otherwise than by a closure notice (or notice under section 9C, which plainly this was not) an officer cannot amend a self-assessment and that the letter clearly indicates that an amendment is being made. But I do not think that there can be read into her words the necessary formality of saying that her enquiry was at an end and that she had reached her conclusions. In particular her use of the word “suggested” did not indicate a final conclusion. If Mrs Stent thought she was giving a closure notice or was attempting to do such, she failed. 207. Section 114 TMA provides: “(1) An assessment… or other proceedings which purports to be made in pursuance of any provision of the Taxes Acts shall not be quashed or declared to be void or voidable by reason of any want of form, or be affected by reason of any mistake, defect or omission therein if the same is in substance and affect in conformity with, or according to the intent and meaning of the Taxes Acts…|” 208. Mr Gordon says that if the letter of 20 March 2017 was wanting in form, section 114 will save the day because the letter purported to be a closure notice. He says that the Court of Appeal in R(oao Archer) v HMRC [218] STC38 made clear that minor deviations from the statutory scheme would not invalidate a closure notice: section 114 imported an objective test which was whether a reader of the letter, equipped with the knowledge of the taxpayer would have concluded that it was intended to be a closure notice. In this case there was: an open enquiry, and a dispute about the taxability of a benefit in kind. The letter, encompassing as it did the section 29 discovery assessments made it clear that Mrs Stent had made up her mind about those issues and, as a consequence, had decided to amend Mr Norton’s self assessment too. To the observer equipped with such knowledge the letter purported to be a closure notice. It was not enough to say that, because the writer did not expressly say that it was a closure notice or that she had completed her enquiries, the letter did not purport, or seem to be a closure notice or convey that to the mind of such an observer. 209. In Archer the question was whether a letter which called itself a closure notice, said that the officer had completed his enquiries, set out briefly his decisions on the disputed matters, explained what to do if the taxpayer disagreed and said that the return was being amended, but did not set out the amount of tax which was due as a result, was a closure notice. The Court of Appeal accepted that the failure to specify the amount of additional tax payable prevented the notice from complying with the relevant provision, but held that section 114 validated the notice. In those circumstances, where Mr Archer had previously been aware of the sums which would be due, and knew as a result of the letter where he stood with HMRC, section 114 applied to validate the notice ([37,38]). 210. Given the concomitant assessments for the other years, I think it is clear that this notice let Mr Archer know where he stood - in the sense that it was clear that HMRC had reached a decision and that an amount of extra tax was payable by refernce to the benefit of the cars. In that sense the letter may have purported to be a closure notice. But section 114 saves the notice only if it was “in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts”
. The provisions indicate, and the intent and meaning, of the Taxes Acts in relation to a closure notice are, that it is an important procedural event - one which thereafter limits HMRC’s ability to make further adjustment or enquiries and starts time running for the taxpayer to make an appeal - and that therefore it should be a clear statement that that time had arrived. The letter of 20 March 2017 does not provide such a clear statement, and in that respect does not comply in substance with the intent of the Taxes Acts. Accordingly it is not saved by section 114. 211. Therefore the (second) closure notice issued on 29 August 2019 closed the enquiry and the appeal against it was made on 7 May 2019. The condition in section 87(4)(a) is not satisfied. (ii) Was the requisite ground of appeal stated? 212. This is relevant only if I am wrong in my conclusion above. 213. At an earlier case management hearing HMRC formally conceded this point but in any case in my view it was. The putting of HMRC to proof that there was a valid section 9A notice in relation to a return made under section 8 to my mind carries the clear message that the validity of any purported section 8 notice is put into question. 214. I do not think that Mr Dewing’s email of 18 February 2019, in referring to “a new argument” affects the nature of the ground of appeal. Not only in my view is that ground to be divined only from the notice and matters which preceded it, but it is not clear that the new argument was not formulated prior to the giving of the notice of appeal. Conclusions: 2015/16 215. I conclude that section 87(4) does not stop section 12D from applying and that as a result the 2015/16 closure notice of 29 April 2019 is valid. Conclusions on Procedural issues 216. I find that the discovery assessments for 2012/13, 2013/14, 2014/15 and 2016/17 were validly made and not invalidated by section 29(2). I find that the 2016/17 assessment was not invalidated by section 29(5). I find that the enquiry into the 2015/16 return was closed on 29 April 2019 and that as a result section 12D applies to validate the enquiry and the closure notice/ Overall Conclusions 217. I dismiss the company’s appeal in relation to the years 2013/14 onwards and allow it to the extent only of the charge in respect of the GT40 for the years before that. 218. I dismiss Mr Norton’s appeal in relation to the assessments or closure notice for the years 2013/14 onwards, and allow it to the extent of the charge in respect of the GT40 only for the years before that. 219. I adjourn the appeals for the parties to agree the figures. If they cannot agree either one of the may apply for the appeal to be reconvened. Rights of Appeal 220. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. CHARLES HELLIER TRIBUNAL JUDGE RELEASE DATE: 14 DECEMBER 2020 [1] There is a dispute about which document was a closure notice and whether the document HMRC say is a closure notice was valid

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