Gordon, Connell, Martino, & Hills v HMRC  UKFTT 307 (TC) – Discovering the Limits of S29 TMA 1970
The First-tier Tribunal (Tax Chamber)’s recent decision in Gerrard Gordon; Gary Connell; Nicola Martino; Ian Hills v The Commissioners for Her Majesty’s Revenue & Customs  UKFTT 307 (TC) held that a transfer from a pension scheme to a pension scheme which was held out to be a Qualified Recognised Overseas Pension Scheme (“QROPS”) could give rise to unauthorised payment charges and surcharges under s208 and s209 Finance Act 2004 where it was subsequently found that the scheme did not meet the conditions. The decision also considered the requirements for an officer to make a discovery under s29 Tax Management Act 1970 and when a discovery would become “stale”.
All four appellants had left the UK. They all transferred their registered UK pensions to an overseas scheme in Latvia in the tax year 2009/10 and received the value of their pension scheme into their bank accounts less fees shortly afterwards. The scheme was excluded by HMRC on 24 August 2010, after the appellants had transferred their pension schemes.
No unauthorised payment charges or surcharges were declared by the appellants on their tax returns for 2009/10. HMRC corresponded with one taxpayer following receipt of the returns; he had a clear conclusion to his case by January 2012 but HMRC did not issue a discovery assessment. The other taxpayers were not contacted by HMRC until 2013 and discovery assessments were issued around the end of the 2014 tax year.
The Tribunal found that the appellants had not proved that the scheme was a QROPS and therefore the pension transfers were unauthorised transfers. The Tribunal dismissed their arguments that the FA2004 regime, which they regarded as a taxation regime, breached the fundamental freedoms of the TFEU because UK pension schemes were treated in the same manner. The Tribunal also dismissed the submissions that the law breached Article 1 Protocol 1 of the Human Rights Act.
However, this was all moot. The Tribunal decided that it was more likely than not that a discovery had been made by an officer of HMRC by mid-2011 following the provision of information by the transferring pension schemes in January 2011. The Tribunal held that three years, or two if necessary in one case, was too long for a discovery to retain its “essential newness”. HMRC failed to persuade the tribunal that a discovery was not made until later. The assessments raised in 2014 were therefore invalid as the discoveries had become “stale” and the appeals allowed.
The decision emphasises that a “discovery” does not need to be a new piece of information. It is sufficient that it newly appears to an HMRC officer that there has been an under-assessment to tax; new information, a change of view, a change of opinion, or even a correction of an oversight all count. However, HMRC then have to act quickly; taxpayers facing discovery assessments should seek to determine whether a discovery has been made at all and, if it has, whether HMRC have delayed on acting long enough that they are no longer entitled to raise an assessment.
The Kittel Principle - Sweet Sixteen
The following is an article written by David Bedenham about HMRC’s wide-ranging application of the ‘Kittel principle’. The current focus appears to very much be on the labour supply industry and the allegation of ‘Mini Umbrella Company Fraud’ (or ‘MUC Fraud’). This article highlights the need for taxpayers to get specialist advice at an early stage when faced with a Kittel decision. If you have any queries about Kittel-related issues or similar denials of input VAT or assessments to VAT, please contact Iain MacWhannell (firstname.lastname@example.org).
What is domicile and why does it matter for tax?
A quick review of the fundamental principle of domicile, why it matters for tax, and what the current political landscape has in store.
Tax note: Financial Institution Notices (FIN)
Understanding paragraph 4A of Schedule 36 to the Finance Act (“FA”)
SHORT CASE REPORT FTT DECISION – EXCISE DUTY - Cantina Levorato SRL v. HMRC  UKFTT 461 (TC)
Short Case Report on FTT Decision Excise Duty
Fast Track for Register of Overseas Entities Owning UK Property
The invasion of Ukraine has prompted the UK government to speedily publish the draft legislation for the Economic Crime (Transparency and Enforcement) Bill 2022 which requires foreign entities that acquire UK property (freehold interests or leases granted for more than 7 years) to register with Companies House and declare details of their beneficial ownership.