UT-2023-000051 - [2024] UKUT 00114 (TCC)

In relation to Ground 1, Ms Choudhury KC, appearing for HMRC, argued that although the FTT had set out the relevant principles in the extract from Beneficial House it did not explain how it had come to its decision based on those principles. Equally, the FTT did not make any findings based on HMRC having “unreasonably protracted” the enquiries. The FTT had expressly declined to make findings as to the reasons for the delay. Instead, the only reason given by the FTT for allowing the applications was that HMRC’s outstanding questions constituted a “fishing expedition”. In the present case, HMRC’s enquiries were targeted on the destination of the £40 million distribution after it left the Settlement. If the Respondents were to provide the requested information and documents, HMRC would be able to complete their enquiries and issue closure notices.

According to Ms Choudhury, the FTT failed to acknowledge that the reason that there was no evidence of funds being transferred to or for the benefit of any of the Respondents, or the receipt of any undisclosed benefit from them, was that the Respondents had refused to provide that information.

Taken to its logical conclusion, Ms Choudhury submitted that the FTT’s Decision suggested that HMRC were not entitled to ask for information or conduct enquiries where they had no evidence of undisclosed income or gains. However, that was the reason why enquiries into taxpayers’ returns were opened and conducted i.e. to check whether the return and the self-assessment contained in the return was correct and complete.