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Tax disputes briefing: Tribunal forces HMRC to close long running enquiry


In the recent case of Jonathan Hitchins and others v HMRC [2023] FTT 127 (TC), the First-Tier Tribunal (FTT) had to consider whether to require HMRC to close a long running enquiry.

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There is no set statutory time by which time HMRC must conclude a tax enquiry.  However, the legislation gives taxpayers the right to apply to the tribunal for a direction requiring HMRC to issue a closure notice within a specified period.  The tribunal is obliged to give the direction unless it is satisfied that there are reasonable grounds for not issuing the closure notice.  

In Hitchins, HMRC had been trying to work out whether three brothers should be subject to tax under the "transfer of assets abroad" (TOAA) rules.  The main focus of their enquiries was a £40 million dividend that had been paid by a company which had been established by their father but which, by the time the dividend was paid in 2003, was ultimately owned by The Hitchins Family Settlement, a Guernsey resident discretionary trust.

The enquiries had been going on for a long time, eight years in relation to one of the brothers, but HMRC said that it needed further information to work out whether, and if so how, a charge arose under the relevant legislation.


The FTT agreed with HMRC that it did not have to rule on the differing interpretations of the TOAA rules, noting that that would be for an appeal against the closure notices issued after the enquiries.

The FTT then considered the evidence and found that the dividend had been appointed by the settlement to beneficiaries other than the taxpayers, and that there was no evidence to indicate that the taxpayers had benefitted from it. This led it to conclude that HMRC had conducted its enquiries to a point where it is was reasonable for them to make an "informed judgment" of the matter, even though every line of enquiry may not have been pursued to the end, with the remaining questions amounting to a "fishing expedition".  The FTT therefore ordered HMRC to issue a closure notice within six weeks.


Taxpayers are sometimes wary of using their right to apply to the tribunal for a closure notice for fear of prompting HMRC to issue a notice demanding that tax be paid. However, Hitchins is a good reminder (like Newpier that we discussed last year) that it can be a useful tool for taxpayers who have been subject to protracted enquiries, putting the burden of proof on HMRC to demonstrate that there are reasonable grounds for not issuing a closure notice. 

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