There appears to be some confusion in the threads over the various routes being taken by advisers and others in the challenge to HMRC. I hope the following help.
Where HMRC has opened an enquiry into a tax return, within the permitted time period, this is called a section 9A enquiry. HMRC can ask questions and for data. They cannot impose penalties if you don't or won't supply answers.
Where HMRC believes that information MUST be supplied, they can issue a request under Sch 36. This is a formal notice and failure to answer can lead to penalties.
In the event that the enquiries reach a point where you (or your adviser) and HMRC cannot agree on the final liability, HMRC will issue a closure notice. This is a statement of why HMRC believes tax is due. In days past, this was quite specific. These days it's usually a vague and rambling letter which offers up one or more possible reasons.
Nobody to my knowledge has challenged the legality of such a notice to date, but I suspect it's coming.
If you (and your adviser) disagree with closure notice, your recourse is to Tribunal. Initially the First Tier Tribunal (FTT). The decision from that Tribunal can be appealed by either party (winner or loser) to the Upper Tier Tribunal. The decision there can then be appealed to the Court of Appeal and from there to the Supreme Court.
The FTT/UTT primary role is to find the facts of a situation and apply the law and precedent from higher Courts. Appeals to the CoA and above can usually only be made on questions of law.
The whole process can take years to complete. A scheme that closed in 2008 has just had closure notices and will no doubt go to Tribunal and I would expect that to get there late 2019. From there, going through the Courts may take another 5 years if it can be funded.
I offer no particular reason for the long delays other than lack of trained Judges no doubt caused by lack of funds.
It is not unusual for HMRC and sometimes the taxpayer to create delays via procedural matters which slows the process as well.
Once the Supreme Court has made a decision on a tax point, all parties are bound.
(HMRC take note. Read the Rangers case again.)
The above process is the same for all tax disputes.
There is a legal route however by which the legality of certain new laws can be challenged or more precisely who and how those laws will be applied can be challenged. This is usually by a Judicial Review. A JR.
This is processed via the Administrative Court. That Court has the power to allow a hearing or not; to grant appeals or not; to stop the effects of the new law from being applied for a period - interim relief.
This route is the domain of lawyers and barristers, whereas in the Tribunals, it is not unusual to see tax or accounting qualified advocates.
So, a JR raised against the Loan Charge seeks to have that law withdrawn or stalled on the grounds of constitutional integrity; human rights; unfairness of operation. If that is successful, the law will have to be amended or withdrawn.
If that is the case, there is NO EFFECT on the way in which the tax issues have to be decided, if necessary via the steps above.
Please do not confuse these.
A victory for LCAG and those running the JR would be an immense step forward not least in showing that HMRC can be held accountable by some official body as Parliament seems incapable of that.
However, if the case is won, HMRC will be wounded and who knows how they will vent their pain?
Where HMRC has opened an enquiry into a tax return, within the permitted time period, this is called a section 9A enquiry. HMRC can ask questions and for data. They cannot impose penalties if you don't or won't supply answers.
Where HMRC believes that information MUST be supplied, they can issue a request under Sch 36. This is a formal notice and failure to answer can lead to penalties.
In the event that the enquiries reach a point where you (or your adviser) and HMRC cannot agree on the final liability, HMRC will issue a closure notice. This is a statement of why HMRC believes tax is due. In days past, this was quite specific. These days it's usually a vague and rambling letter which offers up one or more possible reasons.
Nobody to my knowledge has challenged the legality of such a notice to date, but I suspect it's coming.
If you (and your adviser) disagree with closure notice, your recourse is to Tribunal. Initially the First Tier Tribunal (FTT). The decision from that Tribunal can be appealed by either party (winner or loser) to the Upper Tier Tribunal. The decision there can then be appealed to the Court of Appeal and from there to the Supreme Court.
The FTT/UTT primary role is to find the facts of a situation and apply the law and precedent from higher Courts. Appeals to the CoA and above can usually only be made on questions of law.
The whole process can take years to complete. A scheme that closed in 2008 has just had closure notices and will no doubt go to Tribunal and I would expect that to get there late 2019. From there, going through the Courts may take another 5 years if it can be funded.
I offer no particular reason for the long delays other than lack of trained Judges no doubt caused by lack of funds.
It is not unusual for HMRC and sometimes the taxpayer to create delays via procedural matters which slows the process as well.
Once the Supreme Court has made a decision on a tax point, all parties are bound.
(HMRC take note. Read the Rangers case again.)
The above process is the same for all tax disputes.
There is a legal route however by which the legality of certain new laws can be challenged or more precisely who and how those laws will be applied can be challenged. This is usually by a Judicial Review. A JR.
This is processed via the Administrative Court. That Court has the power to allow a hearing or not; to grant appeals or not; to stop the effects of the new law from being applied for a period - interim relief.
This route is the domain of lawyers and barristers, whereas in the Tribunals, it is not unusual to see tax or accounting qualified advocates.
So, a JR raised against the Loan Charge seeks to have that law withdrawn or stalled on the grounds of constitutional integrity; human rights; unfairness of operation. If that is successful, the law will have to be amended or withdrawn.
If that is the case, there is NO EFFECT on the way in which the tax issues have to be decided, if necessary via the steps above.
Please do not confuse these.
A victory for LCAG and those running the JR would be an immense step forward not least in showing that HMRC can be held accountable by some official body as Parliament seems incapable of that.
However, if the case is won, HMRC will be wounded and who knows how they will vent their pain?
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