Appeals, disputes and investigations

Appeal against discovery assessments dismissed

The First-tier Tribunal (FTT) has refused a taxpayer’s appeal, finding that although the taxpayer’s agent notified HMRC of chargeability, it did not contain sufficient information and therefore the follow-up discovery assessments issued by HMRC were valid.

The taxpayer approached an agent in relation to rental income received on which tax was due. Over the course of several years, the agent wrote to HMRC notifying chargeability for the 2016/17 to 2020/21 tax years with no information of the source of income or any quantification. In 2022, HMRC issued a UTR and requested further information to which the agent provided rental and mortgage statements. HMRC provided a calculation showing income tax of £22,495.40 and a penalty assessment showing £4,008.54 due for the periods in question. The agent appealed the decision stating that valid notices of chargeability were served on HMRC in good time and therefore the tax and penalties were not due.

While there is no specific wording for a taxpayer to notify chargeability, the FTT found that the notification of chargeability provided by the agent contained inadequate information and that HMRC had to drag the information out of them. All of the discovery statements were issued well within the 20-year time limit and were therefore validly issued in accordance with the statutory requirements. One might have expected that HMRC would have simply issued tax returns on receipt of the notifications of chargeability, which would then have quantified the tax liability.

Owens v HMRC [2024] UKFTT 192 (TC)

From Tax Update April 2024, published by Evelyn Partners LLP