A UK taxpayer has lost his case at the Supreme Court (SC) that he had won at the Court of Appeal.  The taxpayer had received a closure notice from HMRC and the tax at stake was just over £700k.  HMRC had sent the initial notice of enquiry to an address that wasn’t related to the taxpayer as required under The Taxes Management Act 1970 (s9A) and the taxpayer argued that since the initial notice of enquiry wasn’t valid then the closure notice issued by HMRC requesting the extra tax was similarly invalid.

His accountant had received a copy of the notice of enquiry and had corresponded with HMRC on their questions.  This correspondence continued until the closure notice was finally issued by HMRC, some seven and a half years later.  The accountant wrote to HMRC confirming that an enquiry had been opened regarding the taxpayer’s return.

The SC agreed with HMRC that a common assumption, that a valid enquiry was open, had been agreed by the parties and therefore the legal doctrine of ‘estoppel by convention’ prevented the taxpayer from arguing to the contrary.  The facts of the case were compared to a judgement issued by the High Court and the SC found that the common assumption had been agreed by the parties, despite them not transacting with one another.  The SC have now endorsed this High Court judgement.

The decision can be found at: Tinkler (Respondent) v Commissioners for Her Majesty’s Revenue and Customs (Appellant) – The Supreme Court

This case highlights how effective communication is paramount when dealing with HMRC, especially during an enquiry.  Please do contact us if you receive a notice from HMRC or are uncertain in how you should handle a tax matter.