Robert Smith v HMRC (TC2768) 2013

The First-Tier Tribunal case calls into question whether HMRC's enquiry window is still meaningful.

The Upper Tribunal’s decision in CRC v Charlton and others [2013] STC 866 seemed to confirm that after the enquiry window was closed, in the absence of fraud, HMRC was thereafter precluded from opening an enquiry and raising an assessment. 

In the case of Robert Smith it was argued that HMRC was precluded from making a discovery assessment because of its failure to open an in-time enquiry which was caused by the relevant HMRC officer going on sick leave that spanned the enquiry window. This argument was dismissed.

A crucial element of this case, however, is that the case involved a tax avoidance scheme (a second-hand insurance policy scheme) but there was no DOTAS number. The case resolves around whether or not information provided satisfied the 'awareness' test that is required for a full disclosure. 

Even though HMRC had an awareness of the scheme, it was held that the only information which can be taken into account is that actually provided by the taxpayer himself.

The fact that HMRC may know all about the scheme and have every conceivable piece of documentation does not matter; if that information did not come from the taxpayer it does not count. 

Although the result was not a good one for the taxpayer, it does not mean that HMRC can ignore the inquiry window if the taxpayer has provided all the relevant information.

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