Scott Knight v The Commissioners for HMRC [2026] UKFTT 1087 (TC)
[2026] UKFTT 01087 (TC)Case No TC 09962
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 15 April 2026Date Judgment date: 22 July 2026
Taylor House, London
Appeal reference: TC/2025/00114
TC/2025/00113
Capital Gains Tax – strike out application – jurisdiction re business assets disposal relief where no claim made at time of closure notice – scope of closure notice – no reasonable prospect of succeeding – treatment of another taxpayer – duplication of tax
Written submissions: from HMRC on 27 May and from the Appellant on 4 June 2026
Before
TRIBUNAL JUDGE ROSA PETTIFERMS GILL HUNTER
Between
SCOTT KNIGHTAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentThe Appellant represented himself at the hearing, although prior to and after the hearing he was represented by Stephen Lesser of Lesser & Co. for AppellantMr Alex Barrett litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION
Introduction
[1]The Appellant appealed a closure notice issued on 5 April 2024 for the tax year 2020/21 under s28A of the Taxes Management Act 1970 (the “TMA” and the “Closure Notice” respectively). The Closure Notice amended the Appellant’s self-assessment tax return to show an additional charge to Capital Gains Tax of £194,272.40. The Closure Notice appeal’s reference is TC/2025/00113.[2]The Appellant also appealed a penalty of £91,793.70 associated with the Closure Notice issued pursuant to Schedule 24 Finance Act 2007 (the “Penalty”) issued on 22 July 2024. The Penalty appeal’s reference is TC/2025/00114.[3]HMRC applied to strike out part of the Appellant’s appeal against the Closure Notice, set out in more detail below (the “Application”).[4]The appeal against the Penalty is not relevant for the purposes of the Application.[5]For the reasons set out below we grant some parts of the Application and dismiss others.
preliminary points
[6]The Appellant represented himself at the hearing, although written submissions both before and after the hearing were prepared by Stephen Lesser of Lesser & Co.[7]Both parties provided skeleton arguments. For the hearing we were provided with a hearing bundle of 176 pages. During the hearing we were handed a copy of a letter from HMRC to the Appellant dated 12 March 2026.[8]The hearing bundle contained a letter rejecting the Appellant’s late appeal of the Closure Notice to HMRC. However, HMRC explained that their position had changed and they had accepted the Appellant’s late appeal to them.[9]Our findings of fact are set out in 'The Facts' part of our decision. Our findings of fact are from the documents supplied. Consequently, most of them require no discussion as they were not in dispute. Where they were in dispute or require further discussion, we provide the reasons for our findings below.[10]We are grateful to the Appellant and Mr Barrett for their skeleton arguments, submissions and the written submissions received after the hearing. We set out below our summary of those submissions on the law and the facts. The parties should, however, be assured that when preparing this decision, the terms of the skeletons were reread, our notes of the hearing reviewed and we read the written submissions with care. Because we do not deal specifically with any point it does not mean that it was not considered in the round when reaching our decision. the facts Procedural background
the facts
[11]The relevant parts of the Appellant’s Grounds for Appeal in relation to the Closure Notice state: Liquidation of Dirty Harry’s Waste Management Ltd not yet finalised.[12]On 2 April 2025 the Appellant said in an email to HMRC: 1 Capital Gains Tax has been charged of £194,272.40 on a distribution from Dirty Harry’s Waste Management Ltd in liquidation which should have been charged at 10% entrepreneurial relief on the distribution of £986,412.60. 2 We disagreed with the 47.25% penalty assessment charged, which was on the incorrect sum anyway. 3 There was also a closure notice for tax year 5 April 2018 which we considered should not be applied as related to Dirty Harry’s Waste Management Ltd in liquidation. So duplication of tax charged.[13]On 28 April 2025 HMRC made the Application, applying to strike out the Appellant’s appeal against the Closure Notice on the basis that it had no reasonable prospects of success, pursuant to Rule 8(3)(c) the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 dated 29 April 2025 (any reference to a Rule is to these rules).[14]The Application was initially made on the basis that the Appellant’s case was:(1) the Capital Distribution was made in the 2021/22 tax year; and/or(2) the liquidation of Dirty Harry’s Waste Management Ltd (“Dirty Harry’s”) had not been finalised and therefore tax cannot be due.[15]On 9 December 2025 the Appellant, following correspondence between the parties and the Tribunal which included seeking the Appellant’s representations on the Application, sent an email to the Tribunal which set out in relevant part additional points on which his appeal was based: 1. The distribution of £986,412.60 we agree was made on the 23rd of March 2021 falling into the 2020/21 tax year. This was dealt with by the Liquidators of Dirty Harry‘s Waste Management Limited who were appointed on the 2nd of March 2021. This is agreed as a capital gain, yet business asset disposal relief needs to be given by HMRC. All the requirements for obtaining business asset disposal relief were met by Scott Knight. Therefore, the gain would be subject to CGT at 10%. The other 40% shareholder was Mark Knight, Scott’s brother who received a distribution on the same date and business asset disposal relief was given to him and dealt with by the same Inspector. Their circumstances were the same. There was nothing deliberate from Scott Knight as we only heard from the liquidators after chasing in December 2022 and had thought originally that any distribution would fall into the 2021/22 tax year. 2. [Text relevant to the Penalty only.] We understand that HMRC are no longer having any objections to any of the lateness. 3. HMRC appear to be duplicating the tax arising on the distributions made from Dirty Harry’s Waste Management Limited. We know that after a significant amount of work all tax liabilities arising from Dirty Harrys Waste Management Limited have been agreed with HMRC. We understand that HMRC have given clearance to the Liquidators and all taxes and interest have been paid.[16]On 9 January 2026 the Tribunal replied to the Appellant’s email of 9 December 2025 as follows: HMRC served their statement of case on 28 April 2025, and the same time made a partial strikeout application. The appellant only responded on 9 December 2025. It appears that while the appellant accepts certain parts of HMRC's case, they do not accept that the appeal against the closure notice should be struck out, as they refer to a claim for business asset relief. Accordingly, the Tribunal directs that a hearing he [sic] held to determine the strike out application and issues the enclosed directions in respect of the strikeout hearing. On the same day the Tribunal issued directions for the hearing of the Application.[17]On 12 March 2026 Officer Georgia Stokes of HMRC wrote to the Appellant addressing a number of points that he had raised. That letter set out, on a without prejudice basis, what HMRC’s decision as to any BADR claim would be, concluding that the Appellant would not be entitled to BADR. HMRC did not object to that letter being before the Tribunal.[18]On 8 April 2026 HMRC filed their skeleton argument for hearing of the Application. The issues identified in that skeleton argument were: Issue One: BADR [Business Asset Disposal Relief] has not been applied, whether the Tribunal has jurisdiction to hear that issue. Issue Two: The Appellant’s brother received BADR in relation a distribution from the liquidation, whether this ground has a reasonable prospect of success. Issue Three: Tax on the distribution has been duplicated, whether this ground has a reasonable prospect of success. Issue Four: Quantum of the gain, whether the amount of the gain should be reduced. We use those labels in this decision ie Issue One etc.[19]In the period 7 April 2026 – 9 April 2026 the parties corresponded about various issues and copied in the Tribunal. The Appellant referenced a postponement although he did not make an application to the Tribunal for such a postponement.[20]On 10 April 2026 the Appellant filed his skeleton argument.
Substantive facts
[21]Dirty Harry’s was incorporated on 24 October 2008. The Appellant was the sole director and held a 60% shareholding.[22]On 4 February 2021 HMRC sent the Appellant a closure notice for the tax year 2017/18 which stated in relevant part: Description The amount chargeable to Income tax in respect of a loan written off in Dirty Harrys Waste Management Ltd. Our conclusion Income tax is chargeable on the amount written off £260,978. Reason for our conclusion The loan written off in the accounts for Dirty Harrys Waste Management Ltd for the year ended 31 December 2017 of £260,978 in respect of an amount owed by Mr S Knight trading as Dirty Harrys Contract Cleaners is assessable income of Mr Knight's, Mr Knight being a participator in the company. Section 415 Income Tax (Trading and Other Income) Act 2005 applies. Description The amount of beneficial loan in respect of amounts owed to Dirty Harrys Ltd by Mr S Knight trading as Dirty Harrys Contract Cleaners. Our conclusion A beneficial loan arises of £25,077. Please see our letter dated 9 December 2020 explaining how this figure is calculated. Reason for our conclusion The amount owed to Dirty Harrys Ltd by Mr S Knight trading as Dirty Harrys Contract Cleaners is a loan treated as a benefit in kind. Mr Knight is a participator in Dirty Harrys Ltd. The benefit should be reported on the participator's self assessment return and charged to tax.[23]The ‘Notice of progress report in voluntary winding up’ (the “LIQ03”) states: The following distributions to members have been made since the day of my appointment: First interim distribution in of £1,644,021.00 was made on 23 March 2021. The distribution comprised of a cash distribution of £420,000.00 and a distribution of specie totalling £1,224,021.00 in respect of the Director’s Loan Account. The LIQ03 is dated 28 April 2022.[24]Dirty Harry’s entered liquidation on 29 March 2021.[25]The Appellant submitted his self-assessment tax return for 2020/21 on 2 February 2022 (the “Return”). No capital distribution was declared.[26]On 7 September 2022 HMRC opened an enquiry into the Return. The letter opening the enquiry stated in relevant part: Why I am contacting you Every year we carry out a number of compliance checks into Self Assessment tax returns. A compliance check is how we make sure tax returns are correct and the right amount of tax is being paid. They also help us to make sure the tax system is operating fairly. I'm opening a compliance check into your Self Assessment tax return for the year ended 5April 2021. This letter and the enclosed notice and factsheets explain the compliance check process and what I need from you.[27]The Notice of Enquiry provided in relevant part: I am opening a compliance check into your Self Assessment tax return for the year ended 5 April 2021. I received this on 2 February 2022. I am doing this under section 9A of the Taxes Management Act 1970. This allows HMRC to check Self Assessment returns. I am opening this check because information on Companies House shows you received the following capital distributions during the liquidation of Dirty Harry's Waste Management Ltd: Date Dividend Type Amount based on 60% shareholding 23/03/2021 First Interim Cash £252,000.0023/03/2021 First Interim Specie £734,412.60 Total £986,412.60 [ = 60% of £1,644,021.00] Section 122 of Taxation of Chargeable Gains Act 1992 (TCGA92) explains that the receipt of any capital distribution is treated as the disposal of the underlying shares and therefore is a chargeable occasion for Capital Gains Tax purposes. S122(5)(b) TCGA92 defines a capital distribution as ‘any distribution from a company, including a distribution in the course of dissolving or winding up the company, in money or money’s worth except a distribution which in the hands of the recipient constitutes income for the purposes of income tax.’ Based on the information above, the capital distributions received on 23 March 2021 totalling £986,412.60 should have been included on your Self-Assessment tax return for year ending 05 April 2021. The evidence above suggests there is an error in your self-assessment return for the tax year ending 5 April 2021. As such I must consider if any penalty should be charged based on the behaviour that led to the inaccuracy; I have attached copies of HMRC factsheets CC/FS7a and CC/FS9 which explains this process. This check will help me to confirm the return is correct and complete. During my check I’ll look at your capital gains. When I look at this I may find that I need to extend my check. If I do, I’ll let you know. By giving me all the information and/or documents asked for you can help progress this check. Your co-operation can also make a difference to the amount of any penalties that may be charged. To help me with this check, please let me have the items listed on the enclosed schedule.[28]The Notice of Enquiry included a schedule that listed the following documents and information: Information and documents that we need In this context ‘document’ means anything used to record any type of information. This includes any records held on computer, magnetic tape, optical disk (CD-ROM/DVD), hard disk, memory stick, flash drive, floppy disk or other recording media. We need the following items: For my compliance check into your Self-Assessment tax return for the year ended 5 April 2021: 1. Proof of your original share purchase in Dirty Harry’s Waste Management LTD and supporting documentation e.g. relevant share certificates and supporting bank statements showing payments made. 2. Supporting documentation for the capital distributions received on 23 March 2021 from Dirty Harry’s Waste Management LTD. To include, but not limited to – proof of the proceeds received e.g. relevant receipts, invoices, asset transfer and ownership documents, and supporting bank statements showing receipt of each payment. 3. Details and computations of any other capital gains or losses made in the period e.g. sales of land or property, share disposals and other chargeable events, and relevant supporting documentation. 4. Details of why the capital distributions received on 23 March 2021 were not declared on your self-assessment return for the tax year ending 05 April 2021. 5. Who completed your self-assessment return for the tax year ending 05 April 2021 and what information did you provide them regarding the distribution? 6. When did you become aware the distribution was caught under s122 TCGA92? 7. Did you discuss the tax implications of the distribution with your advisors? If so, when did these discussions occur? 8. Did you seek any advice about the tax implications of the distribution prior to making your return?[29]On 25 August 2023 HMRC wrote to the Appellant explaining their view about when a capital distribution became chargeable. HMRC chased a response to this letter on 20 December 2023.[30]HMRC issued the Closure Notice (dated 5 April 2024). It assessed Capital Gains Tax (“CGT”) of £194,272.40 on the basis that the Appellant had received a capital distribution of £986,412.60 in the 2020/21 tax year (the “Capital Distribution”). The boxed text on the Closure Notice stated: DescriptionWe have been looking at your Capital Gains Tax position for the year. Our conclusionWe have concluded that Capital Gains Tax is payable for the year. Reason for our conclusionThe reason for our conclusion is that you were in receipt of a Capital Distribution from the Liquidation of Dirty Harry's Waste Management Ltd, which you did not include on your Tax Return.
the law
[31]Section 28A TMA provides that a relevant enquiry is completed when HMRC informs the taxpayer by a final closure notice that the officer has completed his enquiries. The final closure notice must state the officer's conclusions and either state that no amendment of the return is required, or make the amendments of the return required to give effect to his conclusions.[32]Section 31(1)(b) TMA provides that an appeal may be brought against any conclusion stated or amendment made by a closure notice under section 28A TMA 1970.[33]Section 49A TMA provides that if a notice of appeal is given to HMRC, the Appellant may require HMRC, or HMRC may offer, to “review the matter in question”, or the Appellant may notify the appeal to the Tribunal. Section 49D TMA provides that if the Appellant notifies the appeal to the Tribunal, the Tribunal is to “decide the matter in question”. “Matter in question” is defined in s49I(1)(a) TMA to mean “the matter to which an appeal relates”.[34]It is trite law that this Tribunal’s jurisdiction is derived from statute. the arguments HMRC’s arguments during the hearing
the arguments
[35]HMRC’s skeleton which we have set out in part above identified four issues for determination.[36]Issue One – BADR. HMRC says that this issue is not within the Tribunal’s jurisdiction for the following reasons:(1) The Tribunal’s jurisdiction is founded by the “matter in question”, see the explanation of the TMA provisions set out above. BADR was not part of the “matter in question” so cannot be considered as part of this appeal.(2) More particularly BADR was not part of the “matter in question” because no BADR claim was made in the Return and the purported BADR claim was only made during the course of these proceedings. This can also be seen from the focus in the enquiry correspondence on the Capital Distribution. Consequently, there has been no enquiry into a BADR claim, no decision on a BADR claim or a closure notice in respect of a BADR claim.(3) The usual procedure for a BADR claim is that it should be made in a self-assessment tax return, see s42 TMA. If this is not done then a claim may be made outside a self-assessment tax return, in accordance with Schedule 1A TMA. Where HMRC have amended a self-assessment tax return s43C TMA gives a taxpayer additional time to make a claim. HMRC concludes therefore that we should strike out this ground of appeal pursuant to Rule 8(2)(a) as we do not have jurisdiction to consider it.[37]Issue Two – the Appellant’s brother received BADR. HMRC say:(1) The Appellant’s reliance on the fact that his brother was afforded BADR is irrelevant because BADR is not a matter within the Tribunal’s jurisdiction.(2) Even if BADR was relevant, they argue that the tax position of a different individual is not determinative of the Appellant’s liability. Entitlement to BADR depends upon the facts and satisfaction of the statutory conditions in each individual case. Accordingly, HMRC say that we should strike out this ground of appeal pursuant to Rule 8(3)(c) because this ground has no reasonable prospect of success.[38]Issue Three – duplication of tax. HMRC say:(1) The Appellant’s assertion of duplication of tax is a bare assertion.(2) The liabilities identified in an earlier closure notice relating to the tax year 2017/18 closure notice relate to a loan write-off and a beneficial loan, which are distinct from the Capital Distribution (which arises in the 2020/21 tax year). These matters concern different tax heads, different transactions and different tax years, and are not connected.(3) The Respondents contend that there has been no duplication, as the only closure notice in relation to the Capital Distribution is the Closure Notice. Even if the same underlying funds give rise to liabilities under different provisions, that does not amount to duplication in law. Accordingly, HMRC say that we should strike out this ground of appeal pursuant to Rule 8(3)(c) because this ground has no reasonable prospect of success.[39]Issue Four – reduction in quantum. HMRC invite us to reduce the amount of the Closure Notice by £60 to allow for deductible costs on a part disposal basis pursuant to Taxation of Chargeable Gains Act 1992.
The Appellant’s arguments during the hearing
[40]Prior to the hearing the Appellant’s position was that set out in the Grounds of Appeal and the emails of 2 April 2025 and 9 December 2025.[41]The Appellant filed a skeleton argument for the hearing. The Appellant’s skeleton argument deals with the BADR issue only. In summary it:(1) Sets out why it disagrees with HMRC’s position that BADR is not available. The focus of this is that there is a dispute about when trading of Dirty Harry’s ceased.(2) Adopts the position that HMRC have accepted that a BADR claim has been validly made and accepted as a claim. Therefore the only issue insofar as BADR is whether the trading condition is met.(3) Says that strike out is appropriate only where a case has no realistic prospect of success.(4) States explicitly that the Appellant does not seek a substantive determination of BADR entitlement at this stage.
The parties’ arguments in written submissions
[42]We set these out in context below. discussion Procedural
discussion
[43]The Appellant did not make an application to amend his Grounds for Appeal in relation to the Closure Notice to include the additional points raised in his emails of 2 April 2025 and 9 December 2025 (the “Additional Points”). HMRC addressed the Additional Points in their skeleton argument, setting out for the first time why (barring Issue Four which is a discrete point about quantum) the Appellant’s appeal against the Closure Notice should be struck out pursuant to Rule 8(2)(a) (the Tribunal lacks jurisdiction) or Rule 8(3)(c) (no reasonable prospects of success), (the “Additional Strike Out Reasons”). HMRC’s skeleton argument noted that the Appellant had not made a formal application to amend his Grounds for Appeal but nonetheless engaged with them and the Appellant proceeded to rely on them. The Appellant did not at any stage object to this approach. Directions were made, subsequent to the hearing, directing that: the Appellant’s emails of 2 April 2025 and 9 December 2025 ie the Additional Points stand as additional grounds for appeal; and giving the Appellant a chance to make written submissions on the Additional Strike Out Reasons and for HMRC to reply. In the event, first HMRC filed written submissions and then the Appellant filed his written submissions. Neither sets of submissions comply with the directions (the Appellant’s were late and HMRC’s were not in reply). However, we can deal with them relatively easily and so we do. Neither party objected to the directions and therefore the position remains that the Closure Notice Grounds for Appeal include the Additional Points and the Application includes the Additional Strike out Reasons and are for us to determine. Substantive The Capital Distribution
Substantive
[44]The parties now agree that the Capital Distribution was made in the 2020/21 tax year. The remaining issue insofar as the Capital Distribution relates to why it was not included in the Return. That is relevant to the behaviour element of the Penalty which does not form part of the Application. Therefore, we do not deal with it further in determining the Application.
Issue One – the matter in question
[45]We summarised the parties’ arguments above. During the hearing, despite a request for further analysis, in making their arguments neither party made reference to and therefore did not make any submissions on the case law relating to the scope of closure notice appeals (nor was any authority on this issue included in the hearing bundle). There have been numerous cases that bind this Tribunal on the scope of closure notices and associated issues. HMRC’s written submissions referred to some of those cases (see below). We now turn to the authorities.[46]Kitchin LJ (as he then was) in Fidex Ltd v HMRC [2016] EWCA Civ 385 at [45] (“Fidex”) said: In my judgment the principles to be applied are those set out by Henderson J as approved by and elaborated upon by the Supreme Court [in Tower MCashback LLP 1 v HMRC [2011] UKSC 19]. So far as material to this appeal, they may be summarised in the following propositions:(i) The scope and subject matter of an appeal are defined by the conclusions stated in the closure notice and by the amendments required to give effect to those conclusions.(ii) What matters are the conclusions set out in the closure notice, not the process of reasoning by which HMRC reached those conclusions.(iii) The closure notice must be read in context in order properly to understand its meaning.(iv) Subject always to the requirements of fairness and proper case management, HMRC can advance new arguments before the FTT to support the conclusions set out in the closure notice.[47]In Henry Gwyn-Jones v HMRC [2026] UKUT 172 (TCC) the Upper Tribunal considered two more recent Court of Appeal decisions concerning the jurisdiction of the First-tier Tribunal in appeals against closure notices, Investec Asset Finance plc v HMRC [2020] EWCA Civ 579 ("Investec") and Orsted West of Duddon Sands (UK) Ltd v HMRC [2025] EWCA Civ 279 ("Orsted") noting at [58]: In these two decisions the Court of Appeal has thus emphasised:(1) Section 49G(4) restricts the ambit of the appeal, with the result that there is a limit on the jurisdiction of the FTT (Investec at [70]), and it is for the FTT to decide what the subject matter of the closure notice is within the bounds described (Investec at [73]).(2) The authorities do not support a narrow construction of the key phrases in ss49I and 49G (Investec at [71]). The "venerable principle" is an important underlying factor, and has a role to play (Investec at [72]).(3) The context of the closure notice and the surrounding circumstances may demonstrate that the subject matter is broader than the particular conclusion and adjustments addressed in the closure notice (Investec at [73]). HMRC may put forward a case on appeal that seeks a greater tax liability than that set out in the closure notice (Investec at [71] and [72]).(4) The FTT can carry its conclusions on the "matter in question" into effect and ensure the taxpayer pays the correct amount of tax. The FTT can revisit entries in a return which HMRC have not amended if that is needed to give full effect to the FTT's conclusions, provided it does not stray beyond the "matter in question" (Orsted at [135]).[48]This is a useful juncture to record that we are aware that the authorities we cite traverse different factual landscapes which in some instances engage different jurisdictional legislative provision. However, we are satisfied that that does not prevent the principles they enunciate from applying to this appeal: they are broad principles of general application. We also note that it appears that it is usually HMRC that argues for a broad interpretation of a closure notice but in this case it is the taxpayer. Again we are satisfied that there is no reason why a taxpayer cannot seek to rely on these authorities, as was the case in Shinelock v HMRC [2023] UKUT 107 (TCC) (“Shinelock”) which we discuss further below. So, we will determine the conclusion of the Closure Notice (and therefore the “matter in question”) in accordance with the principles set out by these authorities.[49]We are also cognisant of the First-tier Tribunal’s decision in Shinelock v HMRC [2021] UKFTT 320 (TC) (“Shinelock FTT"), which insofar as jurisdiction was upheld by the Upper Tribunal in Shinelock (HMRC’s written submissions also referred us to Shinelock). Similarly to this appeal Shinelock concerned a scenario where a relief had not been claimed at the time the closure notice was issued, for the full facts see Shinelock FTT, in particular at [7] – [31] and [99] – [118]. Of utility to us on the facts of this appeal are the Upper Tribunal’s conclusions in Shinelock at [65] – [66]:65. We do not accept Mr Ripley’s submission that the FTT could never have had jurisdiction in relation to the appeal because no claim had been made by Shinelock for a NTLRD by the date when the closure notice was issued. It would have followed from that fact that, as the FTT found explicitly at [115(2)], HMRC’s reasons for the conclusion in the closure notice did not include the absence of such a claim, or indeed any consideration of whether there was a NTLRD. However, Mr Ripley’s submission ignores both the fundamental difference between the conclusion in a closure notice and the reasons for it, and the right of appeal given to Shinelock against the amendments made in the closure notice. In light of the FTT’s conclusion that the availability of a loss to reduce the chargeable gain was within the “matter in question”, which we have found to be a conclusion which was open to it, the position regarding any claim was an issue which Shinelock was entitled to have determined by the FTT as part of its appeal. To the extent that this argument relies on the position under section 50(7A) TMA, which deals with appeals against claims, we agree with the FTT’s conclusion, at [117], that in view of the FTT’s decision regarding “the matter in question”, jurisdiction exists in relation to the appeal under section 49G(4).66. Mr Ripley also argued that no jurisdiction existed because an enquiry into a claim outside Shinelock’s return would have had to have been made by HMRC under schedule 1A TMA. We agree that an enquiry into a “standalone” claim would normally fall to be made under Schedule 1A. However, we do not accept Mr Ripley’s argument. As we suggested to Mr Ripley in the hearing, this is a technical argument which one might have expected a taxpayer to raise, since it would appear to follow that if it were correct, no valid enquiry has ever been opened by HMRC into the relevant return, and so the purported closure notice would have been invalid. Mr Ripley’s response to this was that any consequences of HMRC having chosen an incorrect enquiry route was a matter “outside the scope of this appeal”. However, Mr Ripley’s submission was effectively inviting us to allow him to have his cake while eating it, an invitation which we decline. More importantly, this was not an argument which HMRC appear to have raised before the FTT, in which case there can have been no error of law by the FTT in failing to consider it. Insofar as the submission was asking the Tribunal to permit a new argument to be run in this appeal, we refuse such a request. If it had been argued before the FTT, Shinelock would have had the opportunity to respond to it in the proper forum, namely before the FTT, including in relation to matters of evidence relevant to whether HMRC might be estopped from now taking the point. We therefore reject this submission.[50]We set out above, in some instances in part, the relevant enquiry correspondence. From that we make the following observations:(1) The enquiring officer was considering the Appellant’s CGT position for 2020/21.(2) What had caught the attention of the enquiring officer was that the Capital Distribution did not appear on the Return.(3) What is labelled ‘Our Conclusion’ on the Closure Notice is a clear and unambiguous statement that CGT is payable. It does not reference the Capital Distribution at all although that is referenced in the ‘Reasons for Our Conclusion’ section. HMRC’s labels do not determine what the conclusions of a Closure Notice are or what the reasons for such conclusions are although in our view in this appeal they are a useful starting point.[51]In light of the above, including the principles set out by the authorities, we conclude that:(1) The Closure Notice sets out HMRC’s conclusion that CGT is payable, which although not expressly stated includes the conclusion that no reliefs are available. HMRC’s emphasis was on the Capital Distribution, therefore in our contemplation of the context and surrounding circumstances (set out more fully above) we considered in particular whether the conclusion of the Closure Notice (we do not rely on HMRC’s label here) might be construed to exclude BADR from the “matter in question”. Our view is that it cannot be. That is because the focus on the Capital Distribution may be analysed in one of two ways. First, as a reason underpinning the conclusion that CGT is payable. If that is right, then in light of the authorities referred to above, it does not circumscribe the “matter in question”. Alternatively, the Capital Distribution may be characterised not as a reason for the conclusion in the Closure Notice but simply as the operative event from which both the conclusion that CGT arises and the conclusion that no relief is due flows. We prefer the latter analysis but, even if we are wrong, neither characterisation excludes BADR from the “matter in question”.(2) HMRC’s reasoning did not include any consideration of whether BADR applied because a BADR claim had not been made at the time the Closure Notice was issued.(3) The issue of whether a BADR claim can be made is within the “matter in question” because HMRC’s conclusion includes that the reliefs were not available. This is not affected by whether or not a claim had been made at the time of the closure notice. Therefore the BADR issue, discussed more fully below, is within the Tribunal’s jurisdiction. We note the Upper Tribunal in Shinelock at [65] reached the same conclusion.(4) There is no issue of fairness here for the reasons set out above in the procedural history section.[52]HMRC’s written submissions identified the discussion and principles set out in Fidex at [45] and in Shinelock at [55] – [67]. HMRC draw from these authorities that:(1) What constitutes the conclusion of a closure notice is a question of fact for the First-tier Tribunal to determine. This point is similar to that made at [58(1)] Orsted above.(2) Discussions subsequent to a closure notice may shed light on the understanding of the closure notice but they would not retrospectively extend the scope of the matter in question, see Shinelock at [64]. Insofar as these submissions, our analysis above was cognisant of the point at [58(1)] Orsted. Further, we have not relied on any discussions subsequent to the Closure Notice being issued. Therefore, HMRC’s points do not change our analysis set out above.[53]HMRC’s written submissions also developed the argument that there has been no enquiry and no closure notice in respect of a BADR claim pursuant to Schedule 1A TMA. Therefore, HMRC say, the Appellant does not have an appealable decision in relation to a BADR claim. It is right that Schedule 1A TMA caters for ‘standalone’ claims. However, we do not see that this fact in and of itself circumscribes what the conclusion of a closure notice is. We note that the Upper Tribunal in Shinelock at [66] reached the same conclusion.[54]HMRC’s written submissions went on to identify the First-tier Tribunal case of Robert Williams v HMRC [2023] UKFTT 00429 (TCC) (“Williams”), in particular at [30]: The applicable legislation, s 31 TMA, does not contain any right of appeal against HMRC’s decision not to admit a negligible value claim that is not in the required form and consequently not valid. Given that the Tribunal’s jurisdiction is governed by that legislation, it follows that the Tribunal does not have the jurisdiction to determine this issue or consider the conduct of HMRC not to allow the claim or refer the appellant to the appropriate guidance. HMRC’s position was that in Williams the First-tier Tribunal found that it did not have jurisdiction to determine whether the relevant claim was a valid claim. Consequently, the First-tier Tribunal in Williams struck the appeal out for lack of jurisdiction and we should follow the same approach. In relation to Williams we note that an analysis of the relevant closure notice was not undertaken: it does not appear that the First-tier Tribunal was referred to the Fidex line of case law. In our view we are bound by the Fidex line of case law to consider the conclusions of the closure notice as we have done above. We also note that in Shinelock (FTT) the First-tier Tribunal did consider and decide the question of whether there was a valid claim and whether it was in time which the Upper Tribunal did not disturb. HMRC have not sought to draw any distinction between Shinelock and this case on the basis that the claims were of a different type, and we can see no reason why such a distinction is material.[55]The issue of whether there was a valid BADR claim, including whether one had been made in time and in the proper form was not fully developed during the hearing. In our view this was due to a number of reasons. HMRC’s position was that no BADR claim had been made by the time Closure Notice was issued and did not in its skeleton argument address the letter of 12 March 2026 (which is presumably why that letter was not included in the bundle). In his skeleton argument the Appellant said that HMRC had accepted in the 12 March 2026 letter that a BADR claim had been made in time, but only provided a choice excerpt of the 12 March 2026 letter. During the hearing the Appellant also said that he had made a further BADR claim in another way (we understood him to mean in the format that HMRC say it must be) but we had and still have no detail on that. It appeared to us that the potential importance of whether or not the Appellant had a valid BADR claim only began to emerge during the hearing, and neither party had marshalled its arguments on this issue prior to the hearing. It is clear from above that in our view we did not need to determine the issue of whether there was a valid BADR claim to determine Issue One of the Application. The written submissions did not materially advance either party’s position. In these circumstances, we decline to determine whether the Appellant had a valid BADR claim and leave this issue to be determined at a hearing where it and any consequences that flow from it can be properly argued and decided.[56]Consequently, we refuse to strike out the Appellant’s appeal insofar as Issue One on the basis of lack of jurisdiction pursuant to Rule 8(2)(a).
Issue Two – the Appellant’s brother received BADR
[57]HMRC’s skeleton argument is couched in terms of seeking to strike out of Issue Two on the basis that the Appellant has no reasonable prospects of success pursuant to Rule 8(3)(c) on this issue. However, HMRC do also say that the Appellant should not be able raise this point as he cannot raise the issue of BADR which is a jurisdiction argument. In our view the treatment of another taxpayer even in the same or materially similar circumstances cannot generally be seen to form part of the conclusion of a closure notice in relation to a different taxpayer: it is simply too far removed. Additionally, the Appellant’s post-hearing submissions urged us to find for the Appellant on this point on the basis of “basic principles of fairness and public law consistency”. This Tribunal has no inherent supervisory jurisdiction (see for example Hok Ltd v HMRC [2012] UKUT 363 ) and so cannot as a matter of course consider what the Appellant seeks to raise without undertaking an analysis of the relevant statutory provisions which the Appellant’s submissions do not do.[58]Consequently, we strike out the Appellant’s appeal insofar as Issue Two on the basis of lack of jurisdiction pursuant to Rule 8(2)(a).[59]For completeness, and in the event that we are wrong on jurisdiction, we will consider the position under Rule 8(3)(c) – whether the Issue 2 has a reasonable prospect of success. As to how to approach this question HMRC took us to the Upper Tribunal’s comments in The First De Sales Limited Partnership v HMRC [2018] at [33]: Although the summary in Fairford Group Plc is very helpful, we prefer to apply the more detailed statement of principles in respect of application for summary judgment set out by Lewison J, as he then was, in Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]. This was subsequently approved by the Court of Appeal in AC Ward & Sons v Caitlin Five Limited [2009] EWCA Civ 1098. The parties to this appeal did not suggest that any of these principles were inapplicable to strike out applications. “i) The court must consider whether the claimant has a ‘realistic’ as opposed to a "fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91 ii) A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8] iii) In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10] v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63; vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.” In our view the Appellant himself must be entitled to BADR and must show that. Therefore, we are not satisfied, on the basis of the case as put before us ie that the treatment of another taxpayer in the same or materially similar circumstances (even if made out), has a realistic as opposed to fanciful prospect of success. Issue Three – duplication of tax[60]The Appellant’s pleadings on this point are scant. The email from the Appellant on 2 April 2025 references a closure notice for ‘tax year 5 April 2018’ and goes on simply to say ‘duplication of tax charged’. The Appellant’s email of 9 December 2025 says only in substance that HMRC appear to be duplicating the tax arising on the distributions made from Dirty Harry’s. The bundle included a closure notice sent to the Appellant for the year 2017/18. We set out above in relevant part the boxed text from that closure notice. It can be seen that the 2017/18 closure notice relates to a loan written off by Dirty Harry’s (£260,978) and a beneficial loan (£25,077). Further that these two events give rise to income tax. The Capital Distribution occurred later in 2021 and relates to a different amount and a different head of tax. The Appellant’s written submissions did not advance his case on this point.[61]On the basis of the case as pleaded we are not satisfied that the Appellant has a realistic as opposed to fanciful prospect of success.
Issue Four – quantum
[62]We understood HMRC asked us to decide this point on the basis that they were successful on Issue One, Issue Two and Issue Three. That is not the case and therefore, we decline to decide the point in case it is affected by the outcome of the substantive hearing.
conclusion
[63]For the reasons set out above:(1) We decline to strike out Issue One (BADR). However, pursuant to Rule 5(3) and particularly in light of the fact that both parties’ arguments have developed significantly in written correspondence and written submissions, we direct that: (a) The Appellant files further and better particulars in relation to Issue One only setting out the factual and legal basis for his appeal (including why he says he has made his BADR claim in time and in the right form and why he meets the BADR criteria) by 5PM 28 days after this decision is released to the parties; and (b) HMRC file an amended Statement of Case, or confirm that they do not wish to do so, by 5PM 28 days after the Appellant has complied with direction 1(a) above.(2) We strike out Issue Two (brother’s receipt of BADR).(3) We strike out Issue Three (duplication of tax).(4) We decline to determine Issue Four (quantum).
Right to apply for permission to appeal
[64]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. Release date: 22 July 2026