In X Ltd, Y Ltd, Z Ltd and 17 individuals v HMRC [2020] UKUT 0029 (TCC), the Upper Tribunal (UT) confirmed that it would be fruitless for the tribunal to consider a taxpayer's applications for a closure direction. HMRC was actively investigating and had issued notices to third parties requiring further information. It also confirmed that the First Tier Tribunal (FTT) does have the authority to order an ex parte hearing to heard in public.

  • HMRC opened enquiries into the companies in 2014. There were significant extractions of cash that were not accurately reflected in the companies’ records.
  • The investigation rolled on and there was friction between HMRC and taxpayers.
  • In 2017 the companies applied to the FTT to issue Closure Notices, confirming the end of the enquiries.
  • Shortly after, HMRC applied to the FTT for Information from Third Parties under Schedule 36 FA 2008. The notices requested details of the financial position of directors and shareholders of the Companies and their spouses. Such requests are heard by the FTT ex parte, meaning that the companies would be unable to attend to hear details of HMRC’s requests.

The FTT decided that the Schedule 36 Notice trumped the Closure Application and decided that they had no powers to allow the taxpayers’ to attend the Schedule 36 notice hearing.

The taxpayers appealed to the UT.

The UT considered that:

  • It could not grant a closure notice if HMRC was still requesting information and therefore decided that the Information Request was valid.
  • It decided that the FTT was wrong about its own powers. It does have the power to allow taxpayers to join an ex-parte hearing, however, the UT could not think of any situation where such a decision would be made.
  • The UT concluded that there was little risk that HMRC would mislead the FTT at a hearing of the Schedule 36 Application. It added that the taxpayers would ultimately have a full right to a hearing in public against any decisions that HMRC make on completion of their enquiries.

The UT remade the FTT’s decision so as to lead to the same overall result. The Schedule 36 Application is to be heard in private.

Links to our subscriber guides:

Closure Notices
When does HMRC issue a closure notice? Can a taxpayer demand one? Are there appeal rights?

How to appeal an HMRC decision
What type of decision is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Third Party Information Notices
When can HMRC require a third party to provide information or produce a document in relation to a taxpayer? Who can appeal a notice? What rights does the taxpayer have?

External link

X Ltd, Y Ltd, Z Ltd and 17 individuals v HMRC  [2020] UKUT 0029 (TCC) 

Comments (0)

Rated 0 out of 5 based on 0 voters
There are no comments posted here yet

Leave your comments

  1. Posting comment as a guest.
Rate this post:
Attachments (0 / 3)
Share Your Location