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.
An Assessment to Tax is never ‘stale’, but it might be out of date: HMRC v Tooth
This article briefly discusses the key points arising out of the decision of the UK Supreme Court in HMRC v Tooth  UKSC 17. The case considered (1) whether a discovery assessment could become “stale” and (2) the meaning of the phrase “deliberate inaccuracy”.
VATA 1994 s.47, Agency, Onward Supply Relief, & Double Taxation
On 12 July 2021, the First-tier Tribunal (Tax Chamber) (“FTT”) released its decision in Scanwell Logistics (UK) Limited v HMRC  UKFTT 261 (TC), rejecting the taxpayer’s claim for onward supply relief (“OSR”).
Whilst OSR is now limited, post-Brexit, to goods imported into Northern Ireland for onward supply to the EU, the FTT’s discussion of agency under section 47 of the Value Added Tax Act 1994 (“VATA”) is of broader interest.
The case serves as a reminder of the significant financial consequences that can result from errors in tax planning, as Scanwell was ultimately held liable for £5.7 million in unpaid import VAT despite the fact that the imported goods almost immediately left the UK (which, if properly planned, could have meant Scanwell was relieved from liability to import VAT).
Draft Finance Bill 2022—tax avoidance measures
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, considers the draft Finance Bill 2022 clauses published on 20 July 2021 in relation to tax avoidance and recent updates to the tax avoidance regime.
Getting Closer: A Global Minimum Tax on Corporations
On 1 July 2021, US Treasury Secretary Janet Yellen announced that countries representing over 90% of global GDP had agreed to a global minimum tax on corporations (“GMCT”). The GMCT seeks to put a floor on tax competition on corporate income through the introduction of a minimum corporate tax of at least 15%. Whilst certain elements give rise to positive expectations, some caveats should be noted. Much will depend on (1) the outcome of future political negotiations and (2) the detail of the drafting at international and national levels.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.