[2025] UKUT 00278 (TCC)

We note at the outset that the phrase “power to recover” is not a defined term under the Finance Act 2020. However, it is clear that Parliament used that phrase against the backdrop of established procedural machinery set out in the TMA 1970, which informs the interpretation of the concept of “power to recover”, and which we have summarised at §24 above. In broad outline, those provisions envisage various different routes for the review, appeal and final determination of an assessment to tax. These provisions apply also to a Regulation 80 determination, pursuant to Regulation 80(5).

Mr Stone’s submission was that where (as was the case for all of the present claims) the relevant Regulation 80 determinations have been appealed to HMRC by the taxpayer, HMRC may offer a statutory review under s. 49C TMA 1970, in respect of which there is no time limit, and in doing so issue a “view of the matter” letter. That “view of the matter”, HMRC contended, could uplift the original Regulation 80 amount. If the taxpayer did not accept HMRC’s offer of a statutory review, the “view of the matter” would then stand as the final amount. If the taxpayer accepted the offer of a review or notified the appeal to the FTT, HMRC would also in principle have the power to seek to recover the amount, albeit that in the case of a statutory review by HMRC that would turn on the outcome of the review process, and in the case of an appeal to the FTT the final outcome would obviously be a matter for the FTT.

Overall Mr Stone contended that the statutory review and appeal mechanisms provided HMRC with the “power to recover” an amount that was greater than stated in the Regulation 80 determinations, once the taxpayer had (as with the claims in the present case) appealed those determinations to HMRC.

The first set of reasons for objecting to this analysis (advanced by the Fluid claimants) was based on the wording of the relevant provisions of the TMA 1970. Mr Goodfellowreferred to s. 30A(4) TMA 1970, which provides that an assessment may not be altered except in accordance with express statutory provisions, submitting that this precludes an uplift of the Regulation 80 amount in a “view of the matter” letter. He also referred to HMRC’s guidance on varying an assessment (EM3267), which as it stood at the relevant time identified only three permissible methods of variation: under s. 54 TMA 1970 (which deals with the settling of appeals by agreement), upon a statutory review, or by the FTT on appeal. In addition, he pointed out the absence of a specific power under s. 49C to vary the assessment in the “view of the matter” letter, in contrast to s. 49E which contains a specific power to “vary” on a statutory review by HMRC.

We do not accept those arguments. In our judgment the “view of matter” given when HMRC notify an offer of a statutory review is capable of uplifting the Regulation 80 amount, such as to provide a power to recover the uplifted amount. That is borne out in particular by the structure and language of s. 49C, which support the conclusion that the “view of matter” may differ from the original assessment and may therefore set out either a greater or a lesser amount of tax.

In particular, s. 49C(4) provides that if the taxpayer does not accept HMRC’s offer to review the matter within the specified period for acceptance, the “view of the matter” is treated as if it were a written agreement under s. 54(1) for the settlement of the matter. As set out above, the consequence is as if the FTT had determined the appeal in the way provided for in the settlement agreement.

Indeed, if s. 49C(4) did not have that effect, it would serve no purpose: the legislation would simply have stated that the original assessment would then stand as a s. 54(1) agreement. Instead, the statutory review provisions make clear that the “view of the matter” is distinct from the original assessment. It is the “view of the matter” (not the original assessment) that may be upheld, varied or cancelled on a statutory review under s. 49E. The review conclusion to uphold, vary or cancel that “view of the matter” will then be final under s. 49F if no appeal is notified to the FTT.

It is also relevant that any variation to the original assessment is not a direct result of the provision by HMRC of its “view of the matter”, but is effected by treating the “view of matter” as a settlement agreement under s. 54(1), carrying the consequence of a variation of the original assessment. There is thus no inconsistency with s. 30A(4): the variation occurs through an express statutory mechanism. To the extent that there is any inconsistency with the EM3267 guidance, that cannot determine the correct legal analysis, and we observe in any case that the guidance has subsequently been updated to make express reference to a variation effected by sending a “view of the matter” letter, which is then treated as a s. 54(1) agreement by virtue of s. 49C(4).

The power to vary the original assessment figure when providing the “view of the matter” also fits rationally with the statutory scheme. HMRC is thereby enabled to amend its original assessment in light of the information provided by the taxpayer during the appeal process. Any variation is, however, subject to protection for the taxpayer, who can notify the appeal to the FTT, or accept HMRC’s offer of a statutory review. In the latter case the review may lead to the “view of the matter” itself being varied or cancelled; and the taxpayer can also still then notify the appeal to the FTT if dissatisfied with the outcome of the statutory review.

The second set of arguments (again advanced by the Fluid claimants) was based on the primary and secondary legislation which introduced the review mechanism in ss. 49A–49I TMA 1970, namely the Finance Act 2008, s. 124 and the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009, Arts 1–6 and Sch 1 §§5–63). Mr Goodfellowargued that neither of these conferred a power to vary or increase assessments in a “view of the matter” letter.

We do not think that the terms of the enabling legislation preclude a variation of the tax amount by HMRC in a “view of the matter” letter pursuant to s. 49C. Section 124(1) of the Finance Act 2008 permitted the making of provisions “for and in connection with” reviews and appeals. That provision is drafted in broad terms, making no mention of the concept of a “view of the matter”, or indeed the power to vary the amount upon a statutory review by HMRC. It is therefore difficult to see how the absence of specific reference to a variation of the assessment as a possible outcome of the review process could carry any implication that such a power should be excluded. The Transfer Order then implemented s. 124(1) by introducing ss. 49A–49I into TMA 1970. That Order was, however, simply the vehicle for making the amendments to TMA 1970 (along with amendments to other pieces of legislation). It is therefore unsurprising that it did not provide any more detail as to HMRC’s specific powers when giving a “view of the matter”.

The third set of arguments (relied upon by both the Fluid claimants and Airedale) concerned the interaction between HMRC’s powers in the review and appeal mechanisms set out in ss. 49A–49I TMA 1970, and the decisions taken by the taxpayers and FTT. Various different submissions were made in this regard.

We do not accept those submissions. The concept of a “power to recover” cannot in our judgment sensibly require that the sum sought by HMRC is immediately payable on the basis of a unilateral decision by HMRC. Rather, “power to recover” is broad enough to cover the situation where HMRC is able to take steps that put it in a position to recover the relevant amount. The operation of the review and appeal processes, and the possibility of various different final outcomes under those processes, therefore does not undermine the conclusion that, following an appeal to HMRC initiated by the taxpayer, HMRC has the “power to recover” an uplifted amount of tax by offering a statutory review, and pursuant to that process providing a “view of the matter” letter which varies the amount specified in the Regulation 80 determination. By doing so HMRC is taking steps which put it in a position to recover the varied amount, albeit that this will then be subject to the decisions thereafter taken by the taxpayer and (if the appeal is notified to the FTT) any final judicial determination. As set out above, the taxpayer cannot unilaterally withdraw an appeal (whether or not it has been notified to the FTT).

Finally, Mr Mullan advanced a further argument concerning the operation of the FTT appeal process. He contended that HMRC’s alternative argument relied upon the FTT having jurisdiction to uplift an assessment in an appeal notified to it, which he said was misconceived because the FTT’s jurisdiction on an appeal was circumscribed by the grounds of appeal relied upon by the taxpayer. He relied in this regard on the decision of the Tribunal in HMRC v BlueCrest Capital [2022] UKUT 200 (TCC), which concluded at §173 that the scope of an appeal to the FTT was governed exclusively by the appellants’ grounds of appeal. His argument was that if a taxpayer’s appeal to the FTT is based on grounds which do not put in issue the amount of the assessment, the amount cannot then be varied by the FTT, as that issue is not then within the scope of the appeal.

This argument appears to have misunderstood HMRC’s alternative argument. In the present case, as set out above, the claimants had appealed the relevant Regulation 80 determinations to HMRC, but had not notified any of those appeals to the FTT. Mr Stone was therefore not specifically relying on an amendment of the determinations through an FTT appeal process (although he pointed out that this would be one way of uplifting the determinations, if an appeal were to be notified to the FTT). Rather, his main submission was that since all of the appeals to HMRC were still pending at the time of the settlement agreements, HMRC could at that time have offered statutory reviews pursuant to s. 49A TMA 1970, accompanied by “view of the matter” letters which uplifted the Regulation 80 determinations. We did not understand Mr Mullan’s argument to be that HMRC would have been precluded from doing so by the terms of the claimants’ initial appeals to HMRC; and in any event we have seen no evidence suggesting that any of those appeals were made on grounds which limited HMRC’s power to uplift the relevant amounts if it had offered a statutory review and provided a “view of the matter” letter.

If an appeal had, however, been notified to the FTT by the taxpayer, we consider that HMRC would have been able to seek to uplift the original assessment, whether or not the grounds of appeal put in issue the amount of the assessment. In Orsted Westv HMRC [2025] EWCA Civ 279, Newey LJ cited with approval (at §123) the conclusions of the Court of Appeal in Investec Asset Finance v HMRC [2020] EWCA Civ 579, where Rose LJ held that HMRC was able to put forward a case on appeal to the FTT seeking a greater tax liability than originally set out in a closure notice. She referred to the “venerable principle” to the effect that there is a public interest in taxpayers paying the correct amount of tax. Newey LJ went on to apply the same reasoning to the scope of an appeal against an amendment to a self-assessment tax return, finding that it should be possible for the FTT to give effect to its conclusions on the matter to which the appeal related by doing more than correcting the specific amendment in issue, if appropriate (§§128–135). Those authorities do not support a narrow construction of the scope of an appeal to the FTT, which would preclude the FTT from concluding that the correct amount of tax was greater than stated in the Regulation 80 determination, if the taxpayer had not specifically put that point in issue.

Our conclusion is therefore that where the taxpayer has appealed a Regulation 80 determination to HMRC, and either the taxpayer requests a statutory review or HMRC offers a statutory review of that determination, HMRC must issue a “view of the matter” letter; and that “view of the matter” may indicate a different amount of tax payable to the amount set out in the relevant Regulation 80 determination. That provides HMRC with a “power to recover” for the purposes of DRRS §3.1.27.3.

That conclusion is, however, subject to the following qualification. A request for a statutory review by the taxpayer or an offer of a review by HMRC is a request or offer to review “the matter in question”, and the “view of the matter” letter provides HMRC’s “view of the matter in question”. The “matter in question” is (as defined in s. 49I TMA 1970) the matter to which the appeal relates – in this case the disputed Regulation 80 determination. HMRC’s “view of the matter” is therefore circumscribed by the scope of the Regulation 80 determination under appeal. If that determination refers to specific employees, HMRC cannot use a “view of the matter” letter to uplift the liability to tax by reference to contributions to different employees. HMRC accepted that point, and did not seek to contend that it had a power to recover in relation to employees different to those specifically referenced in any of the Regulation 80 determinations relied upon.

While Mr Stone’s submissions did not go as far as accepting that the scope of a Regulation 80 determination could be circumscribed by a particular scheme referred to in that determination, such that it could not be uplifted by reference to a different scheme, that was in practice the approach that HMRC took in the decisions before us. That was, for example, the reason why for Fluid Scotland part of the PAYE settlement sum was assessed under the reasonable disclosure condition rather than the power to recover condition: see §115(4) below.)We do not, therefore, need to decide whether a Regulation 80 determination referring to one scheme could in principle be uplifted by reference to contributions under a different scheme, since that issue does not arise on the facts before us.

The issue that does arise on the facts is whether a “view of the matter” letter can uplift an assessment amount by reference to additional contributions under the same scheme as considered in the original Regulation 80 determination. In our judgment, if a Regulation 80 determination makes a general reference to payments under an EBT or EFRBS scheme, without referencing a specific contribution, the “matter in question” to which the appeal relates clearly enables HMRC to consider additional contributions to that scheme.

We make one final observation about the way in which the arguments were put by HMRC on this point. Given our analysis above as to the way in which HMRC may seek to uplift the amount stated in a Regulation 80 determination, although we have found that HMRC did not “issue a determination” for the purposes of DRRS §4.5.1 where the Regulation 80 determination in question was for a lower amount than subsequently claimed by HMRC in the relevant settlement agreement, it seems to us that it is at least arguable that HMRC did nevertheless have “power to issue such a determination”, in the form of its “view of the matter” letter, leading to the variation of the original assessed amount under the determination (subject of course to the outcome of any review or appeal process). HMRC’s argument was not, however, put on this basis. We therefore express no concluded view on this point, but simply note it for completeness in case this issue arises again in a future case.