In Dr Syed Rizvi v HMRC [2023] TC08731, the First Tier Tribunal (FTT) found discovery assessments had been raised in time as while the taxpayer had not been careless in relying on his accountant, that accountant had acted carelessly.

  • Dr Rizvi claimed Income Tax relief through the Enterprise Investment Scheme in the years ended 5 April 2015, 2016 and 2017.
  • While the share subscriptions were made and form EIS1 was signed, no EIS3s were issued.
  • As Dr Rizvi did not hold forms EIS3 he was not entitled to make the claims.
  • On 21 March 2021, HMRC raised Discovery Assessments to reverse the Income Tax relief claimed.
  • Dr Rizvi Appealed the assessments on the basis that they were out of time.

The FTT found:

  • It was not disputed that there was a shortfall of tax.
  • The assessments were raised outside the ordinary four-year time limit.
  • The assessments had only been validly raised if the taxpayer or his advisors had acted carelessly.
  • The tax shortfall had not come about due to the carelessness of the taxpayer as:
    • He had relied on his accountant who had been acting for him for over 25 years.
    • It was not unreasonable to rely on the accountant in the circumstances. They had recommended the EIS investments and would receive the required forms prior to sending them on to the taxpayer.
  • The tax shortfall had come about due to the carelessness of his advisors as:
    • They prepared the tax returns for Dr Rizvi.
    • They should have been aware that an EIS claim required the issue of form EIS3.
    • They promoted the investments and would have been aware that the forms had not been issued.

The appeal was dismissed.

Useful guides on this topic

EIS: Enterprise Investment Scheme (Subscriber guide)
When can EIS relief be claimed?  What are the conditions for EIS relief?  What are the benefits of EIS relief?

EIS: Enterprise Investment Scheme: At a glance
When can EIS relief be claimed?  What are the conditions for EIS relief?  What are the benefits of EIS relief?

Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Discovery Assessments: At a glance
What is a Discovery Assessment? When can HMRC make a Discovery? What are the time limits for Discovery Assessment?

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Dr Syed Rizvi v HMRC [2023] TC08731

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