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

In this case, although the Appellant made the claim on the tax return form, as it did not in fact factor into the Appellant’s calculation of the tax chargeable and payable for 2005-06, see [10] of the decision, it was not a claim made ‘in’ the return.

The boxes (18.8 & 23.9) completed by the Appellant in respect of the claim do not represent information which affects the tax chargeable and payable, as is required by [24]-[26] Cotter, or even adjustments to tax due if [57]of Derry CA is binding, for the purposes of being ‘in’ the return. It was not in dispute, and the FTT found, that the Appellant stated on the return that the loss incurred in 06-07 should be set against his income for 05-06, whether or not the Appellant intended that the claim should feed into the calculation of his tax chargeable and payable for 05-06. In any event, whether intended or not, the claim did not in fact form part of the calculation of tax chargeable or the adjustments to tax due.

The consequence of the FTT’s findings is that, under s.42(11) TMA, the claim was “made otherwise than by being included in a return”. We therefore remake the decision: Schedule 1A TMA therefore applied to the claim, and the enquiry opened by HMRC in a notice given under paragraph 5, Schedule 1A was effective to enquire into the claim made on the face of but outside the Appellant’s return for 05-06. The enquiry was validly opened under Schedule 1A TMA. Whether there was subsequently a valid closure notice for the purpose of paragraph 7, Schedule 1A so as to disallow the claim for relief is considered below.

We should also address paragraph 5(3), Schedule 1A TMA which provides that a claim which has been enquired into under 5(1) of Schedule 1A shall, if it is subsequently included in a return, not be the subject of an enquiry notice under s.9A TMA. We agree with Mr Carey that the valid paragraph 5, Schedule 1A enquiry notice in relation to the claim made outside the 05-06 return did not preclude the subsequent s.9A notice of enquiry into the 06-07 return. This is because the standalone claim made on the face of the 05-06 return was not included in the 06-07 return (which simply referred back to the earlier claim) but was treated as relating to 06-07 by virtue of para. 2(3), Schedule 1B.

Therefore the potential problem generated by the FTT’s conclusion and considered at [83]-[84] of the Decision no longer arises – there will not be two s.9A enquiries into two different returns making the same claim in relation to two different years. HMRC opened i) a paragraph 5, Schedule 1A TMA enquiry into the claim in respect of the 06-07 loss which was made outside the 05-06 return by treating it as relating to 06-07; and ii) an enquiry into the 06-07 return in respect of the loss as it was required to be given effect as a claim made in 06-07. It cancelled the claim in the Schedule 1A TMA closure notice and cancelled the relief in the return in the s.28A TMA closure notice.