3.3.5 Legitimate Expectation.In H Murphy and another v HMRC [2023] EWCA
Civ 497, the Court of Appeal held that the taxpayer had a legitimate expectation that HMRC concession ESC B18 applied without a six- year time limit in respect of credit for UK income tax paid on trust income.
Chapter 4 – The Setting of the Tax System
4.2.6 The Setting of the Tax System.The CIOT and others have drawn attention to the 2022-23
annual report by HMRC, which they argue shows that poor service levels are undermining HMRC’s ability to deliver on their Charter standards. The report is available here: https://www.gov.uk/government/publications/hmrc-charter-annualreport-2022-to-2023/hmrc-charter-annual-report-2022-to-2023
4.3.1.2 Underpayment Surcharges. In W Archer v HMRC [2023] EWCA Civ 626,
the Court of Appeal rejected the taxpayer's appeal against late payment surcharges, holding the taxpayer did not have a reasonable excuse throughout the entire period of default, and the delay in paying the tax was unreasonable once the reasonable excuse had come to an end.
4.3.2 Discovery Assessments. In Danapal v HMRC [2023] UKUT 86 (TCC), the
Upper Tribunal overturned the First-tier Tribunal for making several errors of law, and held that if HMRC accuses a party of careless or deliberate behaviour there must be clear evidence of what that party did or did not do.
4.4 Appeals. In Sept 2023, new and updated guidance was issued on HMRC’s internal governance arrangements in relation to decisions on how tax disputes should be resolved, including under the litigation & settlement strategy and alternative dispute resolution: see https://www.gov.uk/government/collections/how-hmrcresolves-civil-tax-disputes.
4.4.5.4 Restitution. In HBOS and Lloyds Banking Group v HMRC [2023] UKUT 13
(TCC), the taxpayers were entitled to interest from HMRC from the time that they would have made repayment claims had UK legislation been compliant with EU law as opposed to the dates their claims were actually made.
Chapter 5 – Tax Avoidance
5.3.2.1 Disclosure of Tax Avoidance Schemes (DOTAS). In HMRC v IPS Progression Ltd [2024]
UKFTT 136 (TC), the First-tier Tribunal held that the taxpayer was a promoter in relation to arrangements
notifiable under DOTAS because they constituted a standardised tax product. The FTT further held that
the taxpayer did not have a reasonable excuse for failing to notify the arrangements under DOTAS
within the required deadline and imposed a penalty of £900,000. In Greenwich Contracts Ltd v HMRC [2023] UKFTT 874 (TC), the First-tier Tribunal held that the burden of proof is on the taxpayer to show that HMRC had improperly allocated a DOTAS scheme reference number to it (burden of proof not discharged in this case).
5.5.3 The GAAR. Wired Orthodontics Ltd and others v HMRC [2023] UKFTT 17
(TC) is the first case in which a court had the opportunity to consider the application of the GAAR and the relevance of GAAR Advisory Panel’s opinions (the Panel had concluded the entering into, and carrying out of, the tax arrangements were not reasonable courses of action in relation to the relevant tax provisions). However, the First-tier Tribunal ultimately reached its decision without having to consider the GAAR and stated that the GAAR was more appropriately dealt with by a tribunal as and when its application formed the basis of a decision. We await that case with interest, and the wait should not be long. It is also noteworthy that the FTT concluded that a primary purpose of the ‘highly contrived’ tax scheme involving gold bullion was to provide tax-free cash to the Directors in circumstances where a corporation tax deduction could also be sought. Interestingly, and somewhat controversially in this author’s view, on this basis the FTT was satisfied that there was a duality of purpose and denied the deduction under the ‘wholly & exclusively’ test in CTA 2009 s 54.
