TC09594 - [2025] UKFTT 00893 (TC)

In order to succeed in showing that the appeal was not late in the first place, Mr Spencer has made three points. The first is that the 30 day period did not start to run until HMRC had properly set out their view of the matter, which was not until 31 January 2023. Alternatively, HMRC had extended that 30 day period, and the Valentine’s Day letter was submitted within that extended period. He submits that HMRC have the power to extend the period, and, given that a request for a review is something which is required to be done by the taxpayer, section 118 (2) TMA sanctions the request in the Valentine’s Day letter.

Finally, and this must be demonstrated in respect of both of the foregoing, the Valentine’s Day letter is a valid request for an independent review following an offer made by HMRC pursuant to section 49 TMA.

I shall start by considering this last point. I do not believe Mr Spencer is suggesting that the Valentine’s Day letter comprises a request for a review under section 49B. Indeed, this is something which BP specifically disavowed “… We will not be requesting a peer review within HMRC…” In their letter to HMRC of 16 December 2020 (i.e. “the appeal letter”).

Instead, he submits that the text of the letter clearly demonstrates acceptance of the offer made by HMRC to conduct a review as set out in their view of the matter letter, by dint of the wording:

“We are also bemused as to why you have been unable, or unwilling, to follow our requests that the case is listed before the first Tier Tribunal. We enclose for information a further copy of the appeal letter of 16 December 2020, explaining the issues we have regard to the conduct of Counter Avoidance in this matter, and our wish for an independent review of all steps taken, and failure to respond to documentation in a timely manner.

We look forward to receiving your specific response with regard to this letter, together with your further advice as to when the case will be sent to the clerk to the lower Tier Tribunal for listing in due course”.

Both parties urged me to consider the text of this letter from the view of the reasonably objective reader.

Broadly speaking I agree with this. The cases of Bristol & West v HMRC [2016] STC 1491 (“Bristol & West”) and R (on the application of Archer) v HMRC [2018] STC 38 (“Archer”) provide the relevant authority.

In Bristol & West at [26], the Court of Appeal, when considering whether a closure notice was valid stated that “in our view the answer to the question identified in para [25] above depends upon the correct interpretation of the October Notice, as it would be understood by a reasonable person in the position of its intended recipient, namely B&W, having B&W’s knowledge of any relevant context….” (I describe this as the “objective reader” test).

The Valentine’s Day letter, therefore, must be read against the background of the closure notice, the appeal letter, and the correspondence between the parties including the view of the matter letter.

The closure notice was dated 11 December 2020 and the appeal by BP was made some five days later, in the appeal letter.

But it was not until nearly 2 years later, on 16 November 2022, that HMRC sent the view of the matter letter. It is not surprising, therefore, that BP did not have the dates of the closure notice or their appeal at their fingertips.

But it is equally clear to me that the objective reader could not have read the view of the matter letter as being anything other than a view of the matter letter relating to the closure notice and subsequent appeal, even though it referred to the date of the closure notice being 11 December 2021. It would have been clear to the objective reader that that was simply a typo. As Mr Riaz submitted, there was only one closure notice and only one appeal. The view of the matter clearly sets out issues set out in the closure notice and so can only be construed as referring to that.

There is no valid form for a view of the matter letter and, (and I deal with this in a bit more detail below) it seems to me abundantly clear, and I find that it would seem equally clear to the objective reader, that it was HMRC’s view of the matter relating to the closure notice and the subsequent appeal.

In that view of the matter letter, HMRC set out that the appellant has two options. He could ask for a review or he could “appeal to an independent tribunal”.

The objective reader would know that in the appeal letter, BP had, as mentioned above, indicated that they would not be requesting a peer review within HMRC. The reader would also be aware that the letter says: “instead we wish to appeal to the Lower Tier Tribunal”.

This is then picked up at the end of the letter where BP ask HMRC to “confirm that they will be applying to the Clerk to the Lower Tier Tribunal for the case to be listed, and heard in due course. Please also confirm that all demands to tax associated with these disputed assessments will be stood over pending the decision of the independent tribunal”.

This is the context against which the Valentine’s Day letter must be considered.

That letter refers back to the appeal letter of 16 December 2020. It expresses pleasure that HMRC have found it and asks why HMRC have chosen to ignore the narrative set out in it.

It then goes on to say:

“We are also bemused as to why you have been unable, or unwilling, to follow our requests that the case is listed before the first Tier Tribunal. We enclose for information a further copy of the appeal letter of 16 December 2020, explaining the issues we have regard to the conduct of Counter Avoidance in this matter, and our wish for an independent review of all steps taken, and failure to respond to documentation in a timely manner.

We look forward to receiving your specific response with regard to this letter, together with your further advice as to when the case will be sent to the clerk to the lower Tier Tribunal for listing in due course”.

The appeal letter reflects a misunderstanding of the way in which the appeal process works. It asked HMRC to apply to the tribunal for the case to be listed. It also said that the appellant did not want a review. It asked that everything is held over until the independent tribunal has come to a decision. It also sets out the grounds of appeal which include failings by HMRC. A copy of the appeal letter was enclosed with the Valentine’s Day letter.

To my mind therefore, and this is what I think the objective reader would take from the Valentine’s Day letter, is that where BP referred to “our wish for an independent review of all steps taken and failure to respond to documentation a timely manner” it is referring to the appeal to the independent tribunal mentioned in the view of the matter letter and the appeal letter. Although the word “review” is used in the Valentine’s Day letter, I do not think that is being used in the technical sense required by section 49 C TMA, but in the looser sense that it would be the procedure undertaken by the tribunal.

BP had stated they did not want a peer review (where this is used in the technical sense). Instead, they wanted the failings by HMRC considered (reviewing in a nontechnical sense) by the independent tribunal notwithstanding that a consideration of these failings might fall outside the jurisdiction of the tribunal. That simply demonstrates a misunderstanding on the part of BP. It seems to me that they wanted the tribunal to review HMRC’s behaviour, and it was that process to which they were referring in the Valentine’s Day letter.

The text of the Valentine’s Day letter, read in context, is neither a request for a review pursuant to section 49B TMA, nor the acceptance of an offer of a review set out in the view of the matter letter pursuant to section 49C TMA.

I find as fact, therefore, that even given the extended time limit pleaded by Mr Spencer, the appellant did not make a timely request for a statutory review.

In light of the foregoing, this disposes of the first issue in favour of HMRC. But because these points were raised by Mr Spencer, I consider (albeit briefly) his submissions regarding the validity of the view of the matter letter and HMRC’s extension of time.

As regards the first, there is no statutory form for a view of the matter letter. It must simply set out HMRC’s “view of the matter in question”.

Mr Spencer submits that the view of the matter letter was defective in that it did not set out the view of the matter in question due to the incorrect date. And was only valid once that date was corrected on 31 January 2023. I disagree. Adopting the objective reader test, it is abundantly clear what HMRC’s view of the matter in question was. That matter in question was the closure notice and the issues raised in it. The incorrect date does not affect its validity. The objective reader would not have been misled by that error.

I am fortified in this conclusion by Archer, and its analysis of the Court of Appeal decision in HMRC v Donaldson [2016] STC 2511 (“Donaldson”). These decisions demonstrate that the correct approach when considering a document (in this case the view of the matter letter) albeit in the context of section 114 TMA, is not to consider whether there is some a priori categorisation of defects which are fundamental or gross, but one must instead concentrate on the nature and effect of the defect in the particular circumstances of the case (see [35]). One must consider the impact on the recipient. It is clear that the test of whether the recipient was misled under section 114 TMA must be considered from the perspective of the objective reader equipped with the knowledge that, in that case, Mr Archer and KPMG had, including knowledge of what had led to the enquiry and what HMRC’s conclusions were.

Although not argued by Mr Riaz, it seems to me that if there was any defect in the view of the matter letter, it would be cured by section 114 TMA. BP could not have been misled by the view of the matter letter as regards the matter in question.

The second point made by Mr Spencer was that the acceptance of the offer was within the extended time period offered to the appellant in HMRC’s letter of 31 January 2023. Mr Riaz submitted that the officer had no statutory authority to do that, something which is endorsed by Indigo.

HMRC clearly have care and management powers. These were not considered in detail by either party at the hearing, specifically on whether those powers would entitle the HMRC officer to extend time.

It is clear however from Raftopoulou (see [55]) that HMRC consider that the first part of section 118 (2) TMA is to “deal with cases where HMRC have extended time pursuant to their collection and management powers, for example by allowing payment by instalments, with the result the penalties cannot be imposed if the act in question is performed within the extended period”.

Notwithstanding Indigo, I can see an argument that if HMRC extend a review period pursuant to their care and management powers that brings the situation within the potential ambit of section 118 (2) TMA.

I can also see that there may be a distinction between an extension during the 30 day period within which the appellant may take up the offer of a review, and a retrospective extension following expiry of the 30 day period (as was the case in this appeal). And whilst care and management might allow an extension in the former circumstances, it may not do so in the latter.

But if section 118 (2) TMA is to save the appellant, as submitted by Mr Spencer, accepting the offer of the review must be something “required to be done”, and I do not think it is.

I agree with Mr Riaz that once a review was offered, the appellant had three choices. He could accept it; he could notify his appeal to the tribunal; he could do nothing.

It is true that each of these alternatives had consequences. Clearly if he did nothing, the appeal would determine and his liability would be as submitted by HMRC under the closure notice. But that does not mean that he was required to do something. He might have made the decision not to appeal or take up the offer of review for sound commercial or domestic reasons.

To my mind the situation in which the appellant found himself is similar to the situation in which a taxpayer finds himself if he has an opportunity to, for example, make a repayment claim, or make a claim for losses. Once he has chosen to make that claim, then there are provisions with which he has to comply. But he is not required to make the claim in the first place. To my mind he is in an identical position to the taxpayer in Raftopoulou.

In Raftopoulou the Court of Appeal said:

“64.

Even without attending too closely to the context, I take a different view to the UT as to the natural and ordinary meaning of the critical words. As it seems to me, they ordinarily cover mandatory acts, rather than the conditions attached to the voluntary exercise of rights. To be valid, a repayment claim must be made within four years of the end of the relevant tax year, but there is no requirement imposed on a taxpayer to make a repayment claim within four years or at all. I would not disagree with the UT that it is no stretch of language to say that if a taxpayer chooses to make a claim, it “is required to be done” within a certain time limit, but that is not to say that the ordinary meaning of anything required to be done” extends to the performance of a condition for a valid claim”.

The appellant cannot therefore come within the ambit of section 118 (2) TMA, the provision which, it was argued on his behalf, allowed him to accept the offer of the review within the extended time period offered by HMRC.

I therefore conclude that his appeal was settled on the terms of the view of the matter letter. The appellant’s right to appeal arises under section 49H TMA. He had 30 days starting on the date of the view of the matter letter to notify his appeal to the tribunal. He did not do so until July 2024. This, therefore, is a Martland case.