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Cantina Levorato SRL v. HMRC

[2021] UKFTT 461 (TC)

This decision of the FTT is interesting because:

1. The Appellant was an Italian company that was assessed to a UK tax on the basis of HMRC’s allegation that certain “irregularities” for the purposes of excise duty legislation had occurred in the UK element of the supply chain.  HMRC had issued a “Uniform Instrument Permitting Enforcement”, which was received by the Appellant from the Italian tax authorities.  HMRC conceded (and the FTT ruled) that this did not constitute a notification for the purposes of s 12 FA 1994.
2. The conclusion is different from several cases following  Honig v Sarsfield,¹ a Court of Appeal judgment that decided that the statutory time limit did not apply to the notice of the assessment.  For example, in Cirko v HMRC,² the FTT had upheld the assessment, concluding that the delay of the notification (two years after the assessment had been raised) had “no bearing on the validity of that assessment”.  Here, the FTT reached the opposite conclusion.
3. It is the first time that (as far as the authors are aware) the FTT has followed the test created by the Supreme Court in FMX Limited v HMRC³ to quash assessments.  Based on EU law, the principle states that legal certainty requires that assessments are communicated within a “reasonable time”.  Although the FTT had previously applied the test,⁴ it had (as far as the authors are aware) never invalidated an assessment based on it.  In this case the FTT found that the four-year delay between the raising (2013) and notification (2017) of the assessment did not represent a “reasonable time”.

¹ [1986] STC 246.
² [2019] UKFTT 0482 (TC).
³ [2020] UKSC 1.
⁴ Mr Stephen J Mullens v HMRC [2021] UKFTT 131 (TC).