UT (Tax & Chancery) UT-2024-000113 - [2025] UKUT 00165 (TCC)

It was common ground before the UT, and before us, that there was no prescribed form for an enquiry notice or a closure notice. To be effective, an enquiry notice or a closure notice must be understood by a reasonable person in the position of the intended recipient (the taxpayer in this case), having that person's knowledge of any relevant context, as giving notice of an intention to enquire into a claim or close an enquiry (as the case may be)

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The UT said [2016] STC 656, para 103, that it will always be a question of fact whether HMRC have “enquired into” a claim. I do not consider that to be correct. There can be no enquiry into a claim without HMRC giving the notice required by paragraph 5. Whether the letter or other communication in question gave the necessary notice depends on whether it would be read by a reasonable recipient in the position of the taxpayer as doing so. The same is true of any document said to be a closure notice. These are questions of law.

45…The question whether the disputed notice sufficiently makes a taxpayer aware of HMRC’s intention to open an enquiry into a particular tax return is an objective one. The test is whether a reasonable taxpayer, in the circumstances of the taxpayer in question, would have understood that HMRC intended to open an enquiry into a particular tax return. It is not a matter of the parties’ intentions or actual knowledge. We consider that this objective test applies as much to the question whether certain documents could be said to form part of the notice as it does to the question whether the notice itself sufficiently informed the taxpayer of the intended enquiry to be a valid section 9A TMA notice…

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In the light of our conclusion that the Mabbutt letter (either alone or taken together with the Dickinsons letter) constituted a valid section 9A notice it is, strictly, unnecessary for us to consider whether any alleged defect in the notice can be cured by section 114 TMA. Nonetheless, because the point was fully argued before us, we shall briefly give our views on this third ground of appeal. We necessarily assume in what follows that we are wrong in our conclusion on the second ground. It is convenient to deal with the cross-appeal at the same time.

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In our view, if the mistaken reference to the “year ended 6 April 2009” in the Mabbutt letter vitiated the letter for the purposes of section 9A, the defect could be cured under section 114(1) TMA.