< Go Back HMRC s29 'Discovery' Assessments were stale and HMRC's obligation to assist the Tribunal made clear Posted: Nov 25, 2019In another case concerning the 'staleness' of HMRC's 'Discovery' when making assessments under S29 TMA 1970, the Tribunal was asked to consider the same point again in Bashir Jafari v HMRC [2019] UKFTT 0692 (TC)
At the hearing the Tribunal Judge provided an oral explanation for the decision made but a fuller, written, decision was very recently released. The appeals were dismissed for all periods save for 2009/10 which attracted further scrutiny by the Judge who made the following findings of fact:
HMRC discovered an insufficiency to tax in respect of the 2009/10 tax
year no later than on 24 February 2016 (and in view of the decision predicated
on that date, it was unnecessary to ascertain any earlier date on which the insufficiency was discovered); There was no new discovery
when HMRC issued
the s.29 discover yassessment on 15
August 2018, or at any time between 24 February 2016 and then. The Judge reminded HMRC that the Upper Tribunl in Beagles v HMRC [2018] UKUT 380
(TCC) and both the Upper Tribunal and the Court of Appeal in Tooth v HMRC [2018] UKUT 38(TCC);[2019] EWCA Civ 826
HMRC�s view that the doctrine of �staleness� was unsound and devoid of
statutory authority.
It was this stance that compelled the Judge to expand further on his view; "Having reflected after the hearing, I am disappointed that HMRC�s
pleadings failed to deal with the �staleness� issue dealt with in this
decision.I have no doubt that had I
not raised the invalidity of the 2009/10 assessment at the hearing, it would
have escaped scrutiny altogether and the appellant would have paid tax (and
penalties) not properly due. It is true that the paragraph from HMRC�s skeleton argument quoted at 10 above was sufficient to
alert the Tribunal to the possibility that the 2009/10 assessment was invalid �
but only because I had carefully read the papers in preparation for the hearing
and was already familiar with the relevantcases".
The Judge continued; "No attempt was made to bring to the Tribunal�s attention the relevant
jurisprudence on discovery assessments, which undoubtedly incorporates the
concept of �staleness� as matters stand. HMRC must have been aware that the
30-month delay between the discovery being made and the assessment being issued
would � most probably � have led the Tribunal to conclude that the 2009/10
discovery was �stale� (absent any subsequent new discovery), making that
assessmenti nvalid. That HMRC has pending appeals which might give rise to a future change
in the law is immaterial".
The final critisism was..."It is one thing for HMRC to take a principled stance that certain
decisions of the Courts and Tribunals contain errors of law and to argue
accordingly (but frankly) in affected cases. But it is quite another thing to
gloss over decisions which HMRC knows but dislikes and to proceed as if they do
not exist. Doing so obscures the true position and risks the Tribunal coming to
a legally insupportable conclusion...the latter course of action was not properly open to HMRC. In my view, in adopting it in this case, HMRC
did not act with the necessary candour. In fact, regrettably, I would say that
HMRC failed to meet its obligation to �help the Tribunal to further the
overriding objective� of dealing with cases fairly and justly under Rule
2(4)(a) of theRules".
Clearly, the Judge was upset at HMRC's attempt to gloss over the potential legal issues that would have been detrimental to their case and they were roundly critisised for adopting this position but sadly, many more cases contain the same potential flaw in HMRC's position and never reach a Tribunal and so HMRC secure taxes, interest and penalties that may not lawfully be due.
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***************UPDATE - See SUPREME COURT decision in TOOTH - May 2021******************
