Tax inquiry closure: HMRC consultation

HMRC consultation Tax enquiries: closure rules proposes a change from the current joint taxpayer/HMRC referral to first tier tribunal by allowing HMRC a right of sole referral.

The proposal changes the Self-Assessment enquiry framework in respect of Income Tax, including National Insurance Contributions (NICs) Class 2 and 4 in certain circumstances, Capital Gains Tax and Corporation Tax. It contains a number of safeguards, the text of these can be seen below:


4.9 We intend the power to be used sparingly, in cases involving significant tax under consideration or involving issues which are novel, complex, or have a wider impact, including those which can include tax avoidance.

4.10 Operational arrangements for exercising the power will be put in place to ensure the power is used appropriately, fairly and consistently. These arrangements will include nominated senior officials to approve each use of the power. HMRC will consider whether it would be practical for that person to have no line management responsibility for case workers or any role in the affairs of taxpayers to maintain a separation of responsibilities.

4.11 We anticipate that the taxpayer would also have the right of appeal against the “Tribunal referral notice”, in respect of the application for sole referral to Tribunal. If the taxpayer did appeal, and this was heard by the Tribunal, a hearing on the substantive issues would follow, unless the Tribunal decides the HMRC application was incorrect. There will be no right of appeal against the “Tribunal referral closure notice” (that puts the tax into charge following the final decision) unless it fails to reflect the final outcome of the litigation. As such a notice would only be issued once all rights of appeal to senior courts on a point of law have been extinguished or exhausted.

The consultation is open until 12 March and can be found via this link to the GOV.UK website.