TC09600 - [2025] UKFTT 00919 (TC)

On 9 July 2020, after Mr Milhill’s address had been changed on HMRC’s system, Mrs McGuire sent Mr Milhill copies of her correspondence with him, from the opening letter onwards, including the 2014-15 closure notice/amendment and the 2015-16 assessment. Mr Milhill was at home in Grantham at that time. He couldn’t remember whether he received this letter, but his general practice was to pass letters about tax to Ms Griffiths.

On the same day, 9 July 2020, Mrs McGuire also sent:

Mr Milhill was copied on the letter to Haines Watts, and Haines Watts was copied on the letters to Mr Milhill, but no reply was forthcoming from either. On 7 August 2020, Mrs McGuire wrote again to both Mr Milhill and Haines Watts, saying that a penalty for deliberate behaviour was likely because HMRC considered Mr Milhill had knowingly provided an incorrect return.

On 13 August 2020, HMRC sent Mr Milhill a “penalty explanation” letter, which said HMRC would be charging a Sch 24 penalty of £237,710 on the basis that he had deliberately omitted a significant capital gain from his 2014-15 return and had deliberately failed to file an SA return for 2015-16 despite knowing it was required.

On 10 September 2020, Haines Watts responded, providing some answers to Mrs McGuire’s earlier questions; asking that the proposed penalty and the adjustments to Mr Milhill’s 2014-15 return be “reconsidered”, and saying that both Mr Milhill and Ms Griffiths had been unwell and Mr Milhill had suffered bereavements. We make further findings about those issues at §42ff.

On 15 September 2020, Mrs McGuire wrote to Mr Milhill, listing the six letters she had sent out asking for information, and adding that both the 2014-15 closure notice and the 2015-16 discovery assessment had already been issued.

On the same day, she wrote to Haines Watts, saying it was unclear whether their letter of 10 September 2020 was an appeal against the closure notice and/or the discovery assessment, and if so, it was late. She added that if the reference to illness and bereavements was being put forward as reasons for the lateness, more details were required. On 5 October 2020, Haines Watts confirmed that Mr Milhill was seeking to appeal, and provided some more details.

On 13 November 2020, HMRC issued Mr Milhill with a further Sch 36 Notice, and copied it to Haines Watts. On 17 December 2020, in the absence of a response to the Sch 36 Notice, HMRC issued a £300 penalty.

Meanwhile, on 10 December 2020, Mrs McGuire had written again to Haines Watts, explaining that (as set out in HMRC’s Partnership Manual at PM163360) it was incorrect to claim partnership expenses as a deduction in his SA return because the law requires partners to reclaim expenses from the partnership, which deducts them from the profits before calculating each partner’s share. That letter was copied to Mr Milhill.

On 13 May 2021, Mr Loughlin of Haines Watts emailed Mrs McGuire, saying:

“I have made numerous attempts to obtain the information to progress both the appeals and [the] enquiries for 2017 to 2019, but so far have not received a response.

I have again contacted the client stating the importance of providing the information required to progress both issues – i will contact you tomorrow if that is okay to let you know if I have received a response.”

No information was subsequently provided, and on 19 May 2021, Mrs McGuire wrote to Mr Milhill under the heading “Late appeals against the 2015 and 2016 assessments issued 2 March 2020” saying:

“As I have not received a reply in respect of your reasonable excuse as to why you submitted late appeals against your 2015 and 2016 tax assessments issued on 2 March 2020 and how this continued until you submitted your appeals on 5 October 2020 then I can only assume you cannot. Consequently, you can either

•

withdraw your appeals or

•

proceed to Tribunal to have your late appeals accepted.

I would add, that you have made no attempt to provide any further information and/or documents to support your contentions that the amounts assessed in the 2015 and 2016 assessments issued on 2 March 2020 were excessive.”

By this letter, HMRC therefore refused Mr Milhill permission to appeal late against the 2014-15 closure notice and the 2015-16 discovery assessment. On 18 June 2021, HMRC issued Mr Milhill with penalties of £237,710 as explained in their earlier letter, see §24.

Meanwhile, Mr Milhill had belatedly filed his SA returns for 2016-17, 2017-18 and 2018-19, and on 18 August 2020, HMRC issued late payment penalties of £6,248 for the first of those years.

Mrs McGuire opened enquiries into each of those returns, and closed those enquiries on 21 June 2021. The closure notice for 2016-17 increased the tax payable by £41,714; that for 2017-18 increased the tax payable by £82,162 and that for 2018-19 reduced a claimed tax overpayment by £4,260. The closure notices were sent to Mr Milhill with copies to Haines Watts. On 3 August 2021, HMRC issued a penalty explanation letter, saying they intended to charge penalties under Sch 24 on the basis that Mr Milhill had deliberately filed incorrect returns for each of the three years because he had knowingly:

On 17 September 2021, HMRC issued those penalties; they totalled £76,506.

Between the beginning of 2021 and the end of 2023, Mr Milhill continued to be “very busy” with his work activities, as well as with other aspects of his life, including being involved with the local cricket club.