In Wind Energy Renewables LLP v Revenue Scotland [2022] FTSTC 1, the First Tier Tribunal for Scotland (Scottish FTT) held that Closure Notices cannot be unilaterally withdrawn by the tax authorities. Consequently, the subsequent assessment was invalid.

  • Wind Energy Renewables LLP (WER LLP) submitted a Land and Buildings Transaction Tax (LBTT) return in 2015 in relation to the assignment of a wind turbine lease.
  • A Notice of Enquiry was issued by Revenue Scotland in 2016.
  • In 2018, a Closure Notice was issued, which restated the return to show a higher tax liability.
  • In 2019, a Review of the decision found in favour of the original Closure Notice and WER LLP intimated that they would appeal.
  • At this point, the Head of Tax at Revenue Scotland cancelled the Closure Notice, stating that it had been issued invalidly by a member of staff who was not a designated officer. The tax position was to be returned to that of the originally submitted LBTT return. 
  • The enquiry officer then issued a Notice of Assessment for the same amount of tax as had been in the Closure Notice. WER LLP Appealed to the tribunal.

The key question on appeal was whether or not Revenue Scotland had the right to unilaterally withdraw a Closure Notice. This in turn affected the validity of the subsequent tax assessment. The Scottish FTT found that:

  • An assessment to tax can only be issued if there is a loss of tax.
  • The parties and the Scottish FTT agreed that the Closure Notice was valid and the issuing officer was a designated officer.
  • If the Closure Notice could not be withdrawn unilaterally, the amendments made to the LBTT return at the point that it was issued still stood and there was no loss of tax.
  • The interpretation of the Scottish LBTT rules are to be based on wider UK jurisprudence. Part IV Schedule 18 Finance Act 1998 (paras 32 - 34) are very similar to the Revenue Scotland and Tax Powers Act 2014 (RSTPA).
  • In HMRC v Bristol & West plc [2016] EWCA Civ 398, Lord Justice Briggs stated:
    • A Closure Notice cannot be unilaterally withdrawn by HMRC once issued.
    • Having issued a Closure Notice, HMRC have no power to amend the relevant tax return.
  • S.85 RSTPA states that Revenue Scotland can only open an enquiry once.
  • The clear purpose of a Closure Notice is to give finality and certainty to the taxpayer. This is evidenced by the fact that the taxpayer can apply to a tribunal for a Closure Notice to be issued.

It was held that Revenue Scotland did not have the right to unilaterally withdraw the Closure Notice and so the following assessment was not competently issued. The appeal was allowed.

Useful guides on this topic

LBTT: Land and Buildings Transaction Tax (LBTT)
What is Land and Buildings Transaction Tax (LBTT)? What are the rules?

Scottish LBTT Rates
This is a freeview 'At a glance' guide to Land and Buildings Transaction Tax rates.

Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights? 

Time limits for tax assessments, claims and refunds
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?

External link

Wind Energy Renewables LLP v Revenue Scotland [2022] FTSTC 1


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