UT (Tax & Chancery) UT-2024-000024 - [2025] UKUT 00156 (TCC)

In summary, Mr Chacko for the Appellants submitted that the FTT erred in law in holding that a reasonable recipient of HMRC’s letters dated 8 June 2011, in the position of the Appellants and in context, would have understood HMRC to be opening enquiries into both Return A and Return C. That is because the letters were ambiguous. The letter to the taxpayers stating that an enquiry was being opened, and the letter to the agent enclosed and to be read with it, read in isolation or together, were not sufficiently clear so as to leave no doubt as to which return or returns were being enquired into. The FTT therefore erred in finding that there were lawful notices of enquiry into both returns.

The question is whether the letters sent to the taxpayer made it clear, leaving the reasonable recipient in no doubt, which return was, or which returns were, being enquired into. The reasonable recipient would be aware that one of the letters was addressed to them and that it was this letter that was described as a notice of enquiry. The other was a copy of a letter addressed to someone else. However, Mr Chacko accepted that questions as to whether the letter to the taxpayer should be seen as "the notice" with the enclosed letter to the agent as part of the background explaining it, or whether they should both be seen as "the notice" are not really relevant.

Mr Chacko observed that neither letter identified the UTR (Unique Tax Reference) number which HMRC allocates to all land transaction returns. The letter addressed to the Appellants stated that an enquiry was being opened into a single tax return in respect of an identified property. However, two returns lodged by the Appellants met that description: Return A and Return C. There was nothing in the letter to the Appellants that indicated which return was the subject of the enquiry.