During a long-litigated case involving a taxpayer that had used a tax avoidance scheme that was shown not to work, the Upper Tribunal (UT) found for HMRC that the taxpayer had not provided any evidence that he couldn’t pay and therefore tax-geared surcharge notices were valid.  The UT set aside the First-tier Tribunal’s decision but remade the decision in favour of HMRC on a differing point, the lack of evidence of non-payment.  The penalties involved were over £1m.

The taxpayer had argued a few grounds, that he had a reasonable excuse for non-payment of the tax, or that he though the closure notices didn’t amend his self-assessment returns, or that he had a real prospect of success with a judicial review process, or that he shouldn’t have been expected to pay the tax until the judicial review process had been completed.  The UT found that withholding payment until the judicial review process completed was reasonable but the lack of evidence for reasons of non-payment after the judicial review process began to fail meant that the taxpayer hadn’t provided any reasoning to as to why the penalties shouldn’t be applied.

The case can be found at: William Archer v The Commissioners for HM Revenue and Customs [2022] UKUT 00061 (TCC) – GOV.UK (www.gov.uk)

Please contact if you receive an enquiry from HMRC.  In this case, while the taxpayer ultimately lost his challenge, during the course of litigation he was able to show that certain closure notices, the notices HMRC issue when they have completed an investigation and request more tax where HMRC believe more is due, were not valid and therefore HMRC couldn’t chase payment against those notices.  We are experienced with discussing matters with HMRC.