In Executors of Mrs R W Levy v HMRC [2019] TC07233 the First tier tribunal held that HMRC did not have the power to issue a closure notice where the amount of tax due had not yet been determined.

To formally conclude an enquiry HMRC have to issue a closure notice:

  • The closure notice must state HMRC’s conclusions and make any amendments needed.
  • Taxpayers can ask the FTT to direct HMRC to issue a closure notice at any time during an enquiry.
  • The law makes no distinction in its requirements between closure notices and partial closure notices, (which were introduced in FA(No2) Act 2017).

Mrs Levy had made remittance basis claims in her 2014/15 and 2015/16 self-assessment returns. She was UK resident and had lived in the UK for over 45 years but retained a flat in Florida.

  • HMRC enquired into the returns to determine whether she had acquired a domicile of choice in the UK.
  • Mrs Levy applied for a closure notice on the enquiries in May 2018. She died in August 2018 but her executors maintained the closure notice application.
  • In early 2019 HMRC issued an information notice under schedule 36 FA 2008 which was appealed against.
  • The solicitors acting asked the tribunal, were the application for a final closure notice to be dismissed, to direct that a partial closure notice be issued in respect of Mrs Levy’s domicile status for the relevant tax years.

The FTT dismissed the appeal on all counts:

  • Whilst HMRC had formed a view as to Mrs Levy’s domicile position they did not have sufficient information to determine what tax was due for the relevant years so did not have the power to issue a closure notice. Even if this were not the case HMRC had reasonable grounds for not issuing a closure notice.
  • The tribunal could not order a notice to be issued or set a time frame within which one must be issued as it was difficult to determine how long the enquiry would need to continue for to resolve any issues that may arise.
  • HMRC’s domicile enquiries were not disproportionate; they approached the domicile issue in full recognition of the fact-sensitive nature of a domicile enquiry and need to consider the totality of the evidence in the round.
  • HMRC had reasonable grounds to continue with their enquiry and the information requested in the schedule 36 notice was reasonably required for the purposes of the enquiry.

The judge here took the exact opposite view to the FTT decision in an earlier partial closure notice case involving the remittance basis, Embiricos v HMRC [2019] TC07083, where the FTT concluded that, unlike with a final closure notice, HMRC can issue a partial closure notice which does not quantify the amount of tax due.

As both cases are FTT decisions neither creates binding precedent but the Court of Appeal in the earlier Archer case confirmed that closure notices which fail to state amounts and do not contain amendments to returns, are defective.

HMRC concluded Mrs Levy had acquired a domicile of choice in the UK despite retaining a property in the USA; they doubted claims her health had prevented her from leaving the UK or that there was any intention to return to Florida as her property there had not been adapted for her needs. The FTT judge felt there was a reasonable case for this view but also agreed that the taxpayer had a credible position, showing how finely balanced and fact specific domicile cases can be.

Links to our guides:

Closure notices 

Non-domicile status, deemed domicile & tax

Schedule 36 information notices

External link:

Executors of Mrs R W Levy v HMRC [2019] TC07233