Thomas James Niewiarowski v The Commissioners for HMRC
[2023] UKFTT 649 (TC)
James Fera v The Commissioners for HMRC
8 November 2023
[2023] UKFTT 961 (TC)
First-tier Tribunal
Mr. Fera didn't know about a tax on his child benefit. The government tried to make him pay years later. The court said the government's initial attempt was wrong and they couldn't use a later rule to fix it because Mr. Fera complained in time. The court also said it is important that the process is fair to everyone, not just those who can afford a lawyer.
Key Facts
- •Mr. Fera appeals against four discovery assessments for HICBC for the years 2016-2017, 2017-2018, 2018-2019, and 2019-2020, totaling £4,056.00.
- •Mr. Fera's income exceeded £50,000 in each year, and his wife claimed child benefit.
- •Mr. Fera was unaware of the HICBC until receiving a 'nudge' letter in December 2019, after which his wife contacted HMRC to stop child benefit.
- •HMRC issued discovery assessments in March 2021 after discovering Mr. Fera hadn't registered for self-assessment.
- •Penalties were later withdrawn by HMRC.
Legal Principles
Discovery assessments under section 29 Taxes Management Act 1970 (TMA 1970) can be issued outside the normal timeframe if certain conditions are met.
Taxes Management Act 1970, Section 29
Section 29(1)(a) TMA 1970, as amended by section 97 Finance Act 2022, defines the conditions for a valid discovery assessment. Pre-amendment, it required 'income' not assessed; post-amendment, it refers to an 'amount of income tax' not assessed.
Taxes Management Act 1970, Section 29; Finance Act 2022, Section 97
A discovery assessment is not a 'relevant protected assessment' (allowing retrospective application of FA 2022 amendments) if an appeal was filed by 30 June 2021 challenging the assessment's validity due to a lack of 'income' discovery.
Finance Act 2022, Section 97(4), (5)
HMRC's case relied on the correctness of HICBC calculation as established in *Norman v Goulder*.
*Norman v Goulder (Inspector of Taxes) [1945] 1 AER 352*
The Tribunal's overriding objective is to deal with cases fairly, avoiding unnecessary formality and ensuring full participation.
Tribunal Rules, Rule 2
Outcomes
Appeal allowed.
The discovery assessments were initially invalid under section 29(1)(a) TMA 1970 (as it stood in 2021) because they related to HICBC, not a failure to assess income. The retrospective amendment in FA 2022 did not validate them because Mr. Fera's appeal, while not explicitly stating the legal grounds, implicitly challenged the assessments' validity before the 30 June 2021 deadline. The Tribunal rejected HMRC’s argument that the appeal needed to explicitly state the legal issues to be considered a valid challenge.