First-tier Tribunal (Tax)

[2009] UKFTT 333 (TC)

TC00274

Appeal number TC/2009/11910

CLOSURE NOTICE – disclosure of information by taxpayer materially complete – whether reasonable to delay while HMRC make enquiries of third parties? – no (on the facts) – notice directed.

FIRST-TIER TRIBUNAL

TAX

                                      VACCINE RESEARCH LLP                      Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

                                                TRIBUNAL: Judge: RICHARD BARLOW

                                                                        Member: TONY HUGHES

Sitting in public in London on 2 October 2009.

Jonathan Bremner of counsel instructed by BTG Tax for the Appellant

David Yates of counsel instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.     The applicant seeks a direction under section 28B(5) of the Taxes Management Act 1970 requiring an officer of the Board to issue a closure notice in respect of an enquiry into the applicant partnership’s return for the period 15 August 2006 to 5 April 2007 which was made shortly after 9 July 2007.  The applicant seeks a direction that such a notice be issued within 30 days of the hearing in London on 2 October 2009.

2.     The applicant was represented by Mr Jonathan Bremner of counsel and the respondents were represented by Mr David Yates of counsel.  We are grateful to both counsel for presenting the case and arguments succinctly and by approaching the matter in a realistic and helpful way.

3.     There is little if any dispute between the parties about the underlying facts relevant to this application.  It is unnecessary to consider the facts of the applicant’s business except to say that the partnership is involved in vaccine research and has made a very large claim for a capital allowance in its return for the period in question amounting to over £198,000,000.  The respondents have enquired about that claim and it appears that a number of issues may be raised about it.

4.     The enquiry began on 24 July 2007.

5.     In light of the limited scope of the issues actively pursued between the parties before us it is unnecessary to set out in detail the course of the enquiries.  The respondents were prepared to concede that there had been some delays on their part some of which were caused by illness and by the conduct of the enquiry having been transferred between two members of staff for operational reasons but because of the amount involved and the complexity of the issues the enquiry was necessarily a long one.  In fairness we record that the respondents feel they have some cause for complaint that the applicant did not provide all the material requested as soon as it should have done.  In fairness we also record that the applicant feels requests for information were unclear or were for information already given and claims to have cooperated fully in the enquiry.

6.     The applicant originally sought a closure notice by a letter dated 26 June 2009 which requested a notice within 30 days.

7.     By an open latter dated 2 September 2009 the respondents offered to issue a closure notice within 3 months of 2 October 2009 but the applicant rejected that offer.

8.     We were informed at the hearing that the respondents are prepared to agree to give a closure notice but that they now request 3 months from the hearing date.  That is because they still wish to make some enquiries of third parties and they are concerned that they may not be able to obtain it within the 30 days that the applicant still asserts should be the limit placed on the closure notice.  However, Mr Yates frankly conceded that there would be no guarantee that the necessary procedures for obtaining that information would be completed within 3 months.  Consequently the respondents’ position seems to be illogical.  They accept that they may have to make a decision without that information and therefore by implication they agree they can do without it but they are not prepared to concede that they should make that decision within a shorter period in the hope that they will have the third party information by then.

9.     Mr Bremner pointed out that the relevant principles established by authority include the fact that a closure notice need not be a long or complicated document nor need it set out reasons (Tower McCashback LLP 1 –v- HMRC [2008] STC 3366 per Henderson J).  An officer can be expected to make a decision once he has conducted his enquiry to the point where it is reasonable for him to make an informed judgment which may be expressed in broad or even alternative terms (Eclipse Film Partners No 33 LLP –v- HMRC [2009] UKSPC SPC00736 per Judge Edward Sadler).  Mr Yates did not seek to dispute that those were applicable principles and so we do not need to examine the authorities further. 

10.  The respondents’ concession that they would, if necessary, make a decision on the information they now have certainly indicates that they have conducted the enquiry to the point where it is reasonable for them to make an informed judgment which they can express in broad terms or in alternative forms in a simple document.

11.  Accordingly we reject the respondents’ request that they should be allowed 3 months to give the notice which they agree they should give.

12.  On the other hand a period does have to be given for the respondents to make the decision and to draw up the document.  The applicant has argued before us that that should be limited to 30 days from 2 October but we were told, and Mr Bremner did not object to our being told, that the applicant had accepted in open correspondence on 1 October 2009 that 45 days should be allowed.

13.  In the circumstances we think it reasonable that the respondents should be directed to give a closure notice within 45 days of 2 October and we hereby so direct.

RICHARD BARLOW

TRIBUNAL JUDGE

RELEASE DATE: 16 October 2009