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  • 14 Jun 2016
  • Those of you that have worked with John at Pathfinder before will be tired of hearing the standard refrains, “Where is the actual paperwork?” and “What does the letter from HMRC actually say?” There is good reason for this in that firstly we can never remember something accurately and secondly, sometimes the paperwork brings a surprise.

    In the case of Mr Mabbutt (Mabbutt v HMRC [2016] UK FTT 306) his postbag contained a letter opening an enquiry into the year ending 6 April 2009. The sharp eyed ones amongst you would have noticed that there was no such thing with the actual year end (and date of Mr Mabbutt’s submitted tax return for the year ended 5 April 2009).

    Times moved on and the arrangements that Mr Mabbut had entered into were ultimately determined in HMRC’s favour. Due to the delay, HMRC was now outside of the time limit to assess the additional £653,000 tax liability, so the only issue remaining was whether or not the enquiry notice was valid.

    Mr Mabbutt appealed against the eventual closure notice on the grounds that no valid notice of enquiry had been given as the tax year ended 06 April 2009 did not exist. At the tribunal hearing Mabbutt’s counsel, the excellent Keith Gordon, pointed out that any enquiry notice must make it clear to the taxpayer which return was subject to an investigation.

    The matter eventually turned on the wording of Section 114(1) Taxes Management Act 1970. Section 114 allows errors in assessments, notices and the like to be ‘overlooked’ where they do not cause confusion or misunderstanding to the recipient. HMRC argued that the minor error was insufficient to invalidate the enquiry notice and there could be no confusion. The appellant pointed out that if the word “ended” was replaced with “beginning” then the notice would be for a completely different tax year.

    After considering the legislation in detail, the Tribunal determined that the Enquiry Notice was defective and could not be saved by Section 114. The Enquiry Notice, in effect, had to state the year correctly. Mr Mabbut therefore ended up with the benefit of the planning that he had entered into.

    If you would like to discuss the issues raised in this letter, or any other matter relating to Tax Enquiries or Investigations, please call John Horler on 07584 995638 or email

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