UT/2024/000060 - [2024] UKUT 00315 (TCC)

In response to the claimant’s disclosure application, HMRC filed a witness statement from Ms Murphy dated 23 August 2024. Amongst other matters this addressed arguments from the claimant that the test Ms Murphy had set out in her decision in relation to paragraph 10 of the SP was inconsistent with the “factual” awareness test HMRC had said was the correct one in its grounds of resistance. Ms Murphy’s statement explained:

“22…I do not consider…there is any inconsistency between what I have set out in the decision and HMRC’s grounds of resistance…My view was that (having considered all of the material…the claimant had provided) the claimant was aware there could have been profits against which [the claimant] could have claimed relief, as set out in the decision letter…What this means is that [the claimant] knew exactly the amount of profits it had arising from foreign dividends, meaning they had an awareness of profits being in existence.”

Ms Murphy also responded to the claimant’s argument that HMRC had not addressed the alternative condition in paragraph 10, maintaining that she did consider it and explaining her reasons for its rejection as follows:

“23.

…but I concluded that the company was aware of the overseas dividends as they had been included in the original tax return…Their amount did not depend on discussions…the amount of overseas dividends and thus of the profits was fixed and clear when the time limit for the claim expired.”

Mr Firth’s case for disclosure seizes on inconsistencies between this evidence and HMRC’s advancement of the 5 January 2024 letter as a complete and accurate record of HMRC’s decision to refuse. These inconsistencies, in his submission, justify the disclosure sought. In particular Mr Firth points out the test Ms Murphy considered she adopted (which could be described as bare factual awareness of profits existing) was inconsistent with the terms of the letter which indicated that it was awareness in relation to the chargeability of profits that was considered relevant. (Mr Firth highlights various references in the extract at [6] above, for instance to the dividends being “taxable”, the claimant’s doubts “as to treatment” and to such doubts meaning paragraph 10 was not met as “there could have been profits against which [the claimant] could claim relief”.) He also submits her evidence that the alternative condition was considered was inconsistent with the terms of the decision which did not refer at all to the alternative condition. Mr Firth made clear he took issue with the evidence but did not apply to cross-examine Ms Murphy at the disclosure application hearing on the understanding HMRC were not going to then suggest that by failing to do so the claimant would be taken to be accepting the evidence. On behalf of HMRC, Mr Birdling confirmed HMRC did not seek to suggest the evidence was admissible to supplement HMRC’s reasons in the 5 January 2024 letter; their position remained that HMRC’s case would stand or fall on the basis of the reasons set out in that letter. Mr Birdling clarified the statement would nevertheless be evidence in the judicial review proceedings, which the claimant could rely on or make such submissions on as it wished.