Case Study: HMRC Enquiry Notice Deemed Out of Time

In the recent case of Richard Monks v HMRC [2023] UKFTT 853 (TC), the First-tier Tribunal (FTT) made a significant ruling regarding the validity of HMRC’s enquiry into the taxpayer’s tax returns. This article explores the background of the case, the FTT decision, and the implications it holds for taxpayers facing similar circumstances.


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HMRC Enquiry Notice

Richard Monks, a taxpayer, filed his tax return for the 2019/20 financial year on 29 January 2021. HMRC initiated an enquiry under section 9A, Taxes Management Act 1970, into his return by posting him a letter on 27 January 2022, within the statutory time limit. However, Mr Monks claimed he did not receive the letter until after the deadline, rendering the enquiry notice out of time. Additionally, HMRC issued an information notice in accordance with paragraph 1, Schedule 36, Finance Act 2008 on 3 March 2022, further complicating the matter.

What is HMRC Enquiry Notice?

An HMRC enquiry typically commences with a letter containing an official notice informing you of the initiation of the enquiry process. HMRC is not obligated to provide a specific reason for launching the enquiry. However, it is essential that a valid enquiry notice is issued within 12 months of submitting the Tax Return to HMRC, except for late returns. It is advisable to verify the validity of the notice received. The letter will also specify a suggested deadline for your written response, typically within 30-35 days.

HMRC Enquiry Notice Dispute: Mr. Monks’ Challenge

Mr. Monks contested the timeliness of the enquiry notice, arguing it was received after the deadline on February 1, 2022, and questioned the necessity of HMRC’s requested information. He appealed both notices to the FTT, citing HMRC’s failure to adhere to its own guidelines regarding notice timing and pre-enquiry communication with taxpayers.

FTT Decision on Mr. Monks’ Appeal

The appeal before the FTT was allowed in part. The FTT determined that while the enquiry was deemed out of time, the information notice remained valid.

Enquiry Notice Validity Challenge

During the proceedings, HMRC presented evidence of postage for the enquiry notice, contending it affirmed the validity of the enquiry. Additionally, HMRC argued the necessity of the requested documents and information, suspecting Mr. Monks had not declared his entire  income. 

Tax Tribunal Findings

Upon review, the FTT determined that the enquiry notice failed to meet the time requirement, rendering it invalid. Mr. Monks provided evidence, including photographs taken upon receipt of the notice on February 1, 2022, which supported his claim of delayed delivery. Moreover, Mr. Monks demonstrated a prompt response upon receiving the notice, further corroborating his assertion.

Download the Judgment here

Information Notice Validity Assessment

Concerning the information notice, the FTT concluded that HMRC had reasonable grounds to question the accuracy of Mr. Monks’ self-assessment. Consequently, HMRC’s request for information was deemed proportionate and reasonably required to assess Mr. Monks’ tax position effectively.

Tax Litigation UK Implications and Commentary

This case emphasises the importance of scrutinising HMRC notices to ensure compliance with statutory time limits. It also highlights the necessity of maintaining current evidence to challenge presumed delivery dates. Taxpayers must be vigilant in protecting their rights and interests when dealing with HMRC enquiries. 

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