TC09493 - [2025] UKFTT 00456 (TC)

We were provided with a bundle of documents. Officer Jennifer Harrison (“OfficerHarrison”) and Officer Richard Lambert had submitted witness statements which they adopted. The appellant mounted no challenge to their evidence. The appellant gave oral evidence on his own behalf. From this evidence we find as follows:

Throughout the tax years in question, the appellant was an employee.

Prior to the tax years in question, the appellant had been registered into the self-assessment regime in December 2009 but left it in November 2011.

The appellant’s spouse has been in receipt of child benefit on and from 21 May 2007.

The appellant’s ANI for the two relevant tax years as evidenced by his PAYE records (as subsequently adjusted) exceeded £50,000 in each of those years.

On 11 January 2021 HMRC issued a “nudge” letter (“the nudge letter”). That letter was addressed to the appellant at his home address. The nudge letter set out the circumstances in which the appellant would have to pay the charge and advised him to check whether he needed to pay the charge. A link to a website was given where he would find more information.

On 4 June 2021 Officer Harrison selected the appellant for a compliance check. She reviewed his file and saw that the nudge letter had been sent to his home address. She identified that his wife was claiming child benefit. She reviewed his PAYE records, and taxable benefits declared by his employer. She calculated the appellant’s ANI for the tax years ending 5 April 2016 to 5 April 2020 inclusive. She then used the HMRC online calculator for each of these years to see whether HICBC was due from the appellant. She identified that the appellant was due to pay an additional charge of £5,401 for those tax years. For the two relevant tax years it was her view that the ANI was £71,297.55 for 2018/2019, and £64,471.23 for 2019/2020. She then authorised the issue of an opening letter. We find as a fact that it was Officer Harrison who made the discovery of the tax loss for those tax years and that she made that discovery on 4 June 2021.

That opening letter was dated 18 May 2021 and was sent to the appellant’s home address. In it, HMRC explained that their records showed that the appellant was liable to the HICBC and that they considered that he was liable to a charge of £5,401 for the tax years in question. It also explained why late payment penalties and interest might be due.

On 14, 15 and 16 June 2021 the appellant called HMRC to discuss his liability. He followed up these calls by confirming his liability to the charge and disclosing his ANI figures for the tax years in question, on 1 July 2021.

On 22 April 2022, HMRC wrote to the appellant notifying him that discovery assessments would be raised for the charge for those tax years. The assessments were subsequently raised on 17 May 2022, and the penalty assessments on 18 May 2022.

In HMRC’s review conclusion letter dated 21 September 2022, the reviewing officer accepted that the ANI figures for the two relevant tax years were lower than those which had been set out in the assessments for those years. He adjusted them to take into account car benefits and pension contributions. The ANI for 2018/2019 was reduced to £61,953. The ANI for 2019/2020 was reduced to £61,471 But even following those adjustments in both cases, the ANI was more than £60,000 in each year.

On 19 October 2022 the appellant notified his appeal to the tribunal.

There is only one matter which we have to decide, namely whether HMRC have made a valid discovery and issued a valid assessment(s) pursuant to that discovery which they have properly served on the appellant. If they can establish that, then the burden of proof switches to the appellant to show that the assessments overcharged him. In both cases, the standard proof is the balance of probabilities.

As we have said above, the appellant did not make any challenge to the witness evidence of Officer Harrison, the assessing officer. We have found that she made a valid discovery on 4 June 2021. It is our view that the assessments dated 17 May 2022 were validly issued pursuant to that discovery. They were also served on the appellant who has not denied receipt.

The figures in the assessments differ from those in the review conclusion letter. The figures in the assessments were reflected in HMRC’s statement of case which Miss Aziz said were the adjusted figures following adjustments for car benefits and pension contributions. This seems contrary to the conclusions of the review conclusion letter which, having taken those matters into account, had reduced the ANI of the two relevant tax years, to the figures stated at [13(10)] above. But nothing turns on this given that the ANI for both of those years is greater than £60,000 whether on the original figures or on the subsequently adjusted figures.

And indeed, the appellant did not challenge either set of figures, thus accepting that the ANI for the two relevant taxes was indeed more than £60,000.

The appellant’s case in his notice of appeal focused very much on a dissatisfaction with the HICBC legislation and its application by HMRC. In his view he had been treated unfairly (indeed his language is considerably stronger than had) and the impact of the assessments has been detrimental to both his physical and mental health, and that of his family.

At the hearing it was clear that the appellant did not fully understand why the original assessments and the penalty assessments had been altered such that only two years are now subject to the charge, and none of the years are subject to penalties. We explained this to him (with the approval of Miss Aziz). It is one of the reasons why we have set out, at some length, the law in relation to discovery assessments in the context of HICBC, and time limits relevant thereto.