TC09574 - [2025] UKFTT 00852 (TC)

I was provided for the hearing with two bundles of documents, one of which included authorities. I was subsequently provided with a further bundle of documents, including authorities, as part of HMRC’s post hearing submissions. Mr Kelly tendered a witness statement and gave oral evidence. From this evidence I find as follows:

Mr Kelly was a member of two film partnerships, Invicta and Echo.

He returned income from both partnerships on his tax returns.

On 28 February 2017 HMRC issued closure notices to Invicta for the tax years 2002/2003 to 2005/2006 (“the relevant tax years”).

On 18 August 2023, HMRC issued a “consequential amendment notice” (i.e. a notice under section 28B(4) TMA). These made consequential amendments to the appellant’s self-assessment tax returns for the relevant tax years.

On 8 September 2023, HMRC wrote to the appellant regarding an underutilised loss for the tax year 2003/2004 which arose because of the consequential amendments.

The appellant did not respond to this so on 29 September 2023 HMRC sent a further letter to the appellant explaining that they had now used the loss in the most beneficial way for him and sent him a self-assessment statement dated 29 September 2023 showing that the net amount due from him was £6,577.41.

On 11 October the appellant appealed to the tribunal against the adjustments made to his tax returns for the relevant tax years. The amount against which he appealed was £6,581.16.

On 20 December 2023 the appellant made an application to HMRC for his dispute to be admitted into the ADR programme. That application was rejected on 29 January 2024 on the basis that the appellant had no right of appeal against the consequential amendment notice.

In summary Mr Riaz submitted as follows:

In order for the tribunal to have jurisdiction, the appeal must fall within the ambit of section 31 TMA. The appellant’s appeal is against the consequential amendment notice. This does not fall within the ambit of section 31 TMA. It is not itself a closure notice.

There is considerable case law supporting this analysis including Knibbs v HMRC [2019] EWCA Civ 1719 (“Knibbs”).

It is not an assessment of tax which is not a self-assessment.

Furthermore, there is no evidence that the appellant made a valid claim under section 32 TMA which was considered and refused by HMRC, thus giving the appellant a right of appeal under that section.

Mr Kelly’s remedy to his assertion that he does not owe this tax is to make a claim for overpayment relief. HMRC have advised him of this.

In summary Mr Kelly submitted as follows:

HMRC have made two amendments. The first is reflected in the consequential amendment notice which he does not seriously dispute. However, he is appealing against an amendment which is very different.

He was a member of two partnerships, Invicta and Echo, and he returned his partnership income to HMRC. However, HMRC recorded that income as if it was received from only a single partnership. This is clear from HMRC’s records.

So for example, his income in a particular year might have been 5 from Invicta and 5 from Echo. This was recorded as a single sum of 10 by HMRC.

Following the consequential amendment, his Invicta income was increased from (using the above example) 5 to 6.

What should therefore have happened was that his total income for that year should have been increased from 10 to 11. But HMRC increased it from 10 to 16. This is recorded in HMRC’s documents and indeed is accepted as having happened by HMRC itself.

And it is against this conclusion that he is appealing.

In his submission the consequential amendment notice can comprise a free-standing assessment which gives him a right of appeal under section 31 TMA.

Alternatively, he has made a claim to HMRC under section 32 TMA which HMRC have refused and which gives a right of appeal under that section.

By seeking to strike out his appeal, HMRC are also denying him the opportunity of having this matter heard and resolved.