In HMRC v NT Ada Limited [2018] UKUT 0059 (TCC), the Upper Tribunal (UT) found that HMRC failing to offer a Statutory Review would not invalidate a penalty notice, though one was offered in this case.

Statutory Review is an alternate method of resolving an appeal with HMRC before or instead of appealing to the FTT. For direct taxes, HMRC may offer a review or the taxpayer can request one. For indirect taxes, HMRC are required (s83A of VATA 1994) to offer a Statutory Review of any appealable decision.

HMRC made three decisions in respect of NT Ada Limited (then NT Jersey Limited) against which NT made “protective” appeals to the FTT, contending that the FTT did not have jurisdiction:

The FTT made a preliminary decision that the first two were within its jurisdiction, but that as HMRC had not complied with s83A the decision to impose the penalty was invalid. It therefore struck out the appeal.

HMRC then appealed this last decision to the UT.

HMRC’s letter notifying the penalty made no reference to a Statutory Review other than the following paragraph:

“If you disagree with this decision you can ask for a review by an independent HMRC Officer by writing to the address above within 30 days of the date of this letter. Or you can appeal to the Tribunal Service within 30 days of this letter. If you opt for a review, you can still appeal to the tribunal after the review has finished.”

The UT found:

  • S76 sets out HMRC’s ability to raise a penalty and does not prescribe any format thereof
    • As such, failure to offer a review does not invalidate the notice
    • The remedy available if HMRC fails to comply with its obligations is judicial review
  • The “reasonable reader” would understand that they were being given a real choice by the paragraph quoted above. As such, the taxpayer was offered a Statutory Review.

Note: the appeal on the substantive issues has yet to be heard. However, the penalty was withdrawn and reissued due to a calculation error; the case proceeded to establish the point of principle.


There is no scope for the taxpayer to request a statutory review of a VAT decision under the legislation on the basis that it is mandatory for HMRC to offer it. 


Statutory Review

Registering for VAT

Penalties (VAT)

External HMRC v NT Ada Limited [2018] UKUT 0059 (TCC)