Julian Lowe v The Commissioners for HMRC
[2024] UKFTT 826 (TC)
Mark Stewart Wyatt v The Commissioner For HMRC
26 September 2024
[2024] UKFTT 867 (TC)
First-tier Tribunal
HMRC incorrectly charged a taxpayer double tax. The court said this was wrong and threw out the incorrect tax bill. HMRC now has to issue a new, correct tax bill and may have to pay the taxpayer’s legal costs.
Key Facts
- •HMRC issued discovery assessments for tax years 2007/08 and 2009/10 (Relevant Assessments) for alleged income tax and capital gains tax on property development activities.
- •The assessments combined income tax and capital gains tax on the same profits, effectively double-taxing the appellant.
- •HMRC issued fresh assessments nine days before the hearing, correcting the error and only including income tax.
- •The appellant was represented by his father, who is not a lawyer.
Legal Principles
Section 29 Taxes Management Act 1970 (TMA) governs discovery assessments, allowing an officer to make an assessment for the amount they believe is necessary to make good the loss of tax.
Taxes Management Act 1970, Section 29
A discovery assessment cannot exceed the amount the officer believes is necessary to recover the lost tax; double-taxing the same income is invalid.
Interpretation of Section 29 TMA
Section 50 TMA allows for the reduction of overcharged assessments on appeal; however, the Tribunal found this insufficient to address the issue of invalid assessments.
Taxes Management Act 1970, Section 50
Outcomes
The Relevant Assessments were deemed invalid because they exceeded the amount the officer believed was due.
The assessments improperly doubled the tax on the same income, exceeding the officer's opinion of the tax due, and depriving the taxpayer of the option to simply accept the assessment.
The Relevant Assessments were struck out.
To allow consideration of the fresh assessments alongside the remaining appeals.
The appeal against the remaining assessments was stayed for 60 days.
To allow time for the appellant to appeal against the new assessments and for these appeals to be joined.
HMRC was directed to make representations regarding costs at the next hearing.
HMRC's issuance of invalid assessments and late correction potentially warranted a costs order.