HMRC Consultative Document - marketed tax avoidance schemes

[Manu]

Thanks - not sure why the tax firm felt otherwise. They mentioned discovery assessment being arguably invalid. I have asked them for clarification.

So no choice then

And I think that's correct.

Time limit for opening an enquiry is generally 12 months from the last filing date of a return.
Time limit for a discovery assessment can extend to 6 years from that filing date
Once a COP8 is out there, forget time limits as HMRC can drag things on forever.

[Boobetty]

Hi manu, can you confirm that you disclosed your scheme's SRN (DOTAS reference number) in a prominent place on your tax return? If you did, this certainly undermines validity of the discovery assessment due to the UTT ruling in the charlton/corfield case. It may be worth asking HMRC why they think their DA is still valid in view of this ruling.

[Manu]

Yes - I can confirm it (SRN) was clearly mentioned. For 2008-09 even the loan amounts received is clearly stated.

We are waiting to hear formally from HMRC as to why they think their DA is still valid. However their verbal response to my tax specialist representative firm is that your client (i.e. me) will have to pay. If we are not satisfied with HMRC then we are free to challenge their decision in court.

Hi manu, can you confirm that you disclosed your scheme's SRN (DOTAS reference number) in a prominent place on your tax return? If you did, this certainly undermines validity of the discovery assessment due to the UTT ruling in the charlton/corfield case. It may be worth asking HMRC why they think their DA is still valid in view of this ruling.

[tax is taxing]

ROB

Thank you for the support.

My interest is primarily tax avoidance or more particularly what is now seen as tax avoidance but which at the time of joining was seen as legitimate. Most of my clients are victims of moving goalposts and sales people with silver tongues matched only by their ability to disappear when the manure hit the ventilation, using fat wallets to absorb the shock.

I have NO clients in the contractor sector. My business has NO means to assist those in this sector unless by way of legal challenge for mis-selling and to be blunt there are expert firms out there who do that better than us.

I do NOT work for HMRC.

Hang around Rob.....

I don't care who you work for or what you do or why you only post between 9-5.

I find your analysis very useful. Good to know the normal tax / HMRC procedures.

Besides, I hope that nobody here will base his/her tax decision on an advice from an anonymous person in this forum.....

Do stick around.

[Rob79]

Hi manu, can you confirm that you disclosed your scheme's SRN (DOTAS reference number) in a prominent place on your tax return? If you did, this certainly undermines validity of the discovery assessment due to the UTT ruling in the charlton/corfield case. It may be worth asking HMRC why they think their DA is still valid in view of this ruling.

The question of the validity of a discovery assessment arising from the timing of issue is certainly worth keeping in mind.

The fact that an SRN was on a return for a year in which a discovery assessment was subsequently raised I suggest will not be a major factor in determining the validity of the discovery assessment.

"Discovery" in the context of a tax assessment does not necessarily mean that something has been "discovered". For example, an SRN can be disclosed but left off the computer record by clerical error. A subsequent correction of that error would count as discovery.

Equally, HMRC could "discover" that their view of a particular scheme was incorrect and that they can change it.

Unfortunately seeking refuge in the fact that something has been declared to HMRC is not going to work.

[DonkeyRhubarb]

If you put an SRN on your return surely it weakens HMRC's grounds for using discovery?

[eek]

If you put an SRN on your return surely it weakens HMRC's grounds for using discovery?

Well they have to try, but surely a court would throw it out....

[Rob79]

If you put an SRN on your return surely it weakens HMRC's grounds for using discovery?

The presence or absence of information on a return is not particularly relevant to "discovery".

It's important when we get to questions about default, failure to comply, perhaps even fraud, but not to whether HMRC has "discovered" that the tax treatment of a particular item has occurred.

Discovery is more about "was the tax treatment of a particular item of income/expense correct in the light of information that subsequently comes to light?"

Information in this sense means perhaps details from a third party (loan documents, trust structure, trust deeds), conversations with whistle blowers about differences between how a scheme was documented and how it was operated, all of which was not available when HMRC made their initial analysis and adopted a particular tax treatment.

More worryingly, discovery also includes situations where the HMRC officer who looked at the initial information and made an assessment is subsequently deemed not to be as competent as a "hypothetical" officer who was more aware of the law, the state of decided cases and HMRC policy. There have even been findings of discovery where an HMRC officer was allowed to go on extended leave without properly briefing their replacement. Personally I think this goes too far but equally unfortunately, I'm not the judge hearing the case.

So, will inclusion/exclusion of SRN weaken HMRC? On balance I think not so far as discovery is concerned.

[DonkeyRhubarb]

The presence or absence of information on a return is not particularly relevant to "discovery".

I'm not sure the courts see it like that.
Victory for the taxpayers in the Charlton case as the UT confirms that HMRC's discovery assessments were unlawful - RPC Tax Take

[Boobetty]

I'm not sure the courts see it like that.
Victory for the taxpayers in the Charlton case as the UT confirms that HMRC's discovery assessments were unlawful - RPC Tax Take

Totally agree, which is why I mentioned this case in an earlier post in this thread. To be fair the ruling made a point of saying that the presence of the SRN wasn't the only factor in dismissing HMRC's appeal. However, it set an important precedent that when considering 'information made available' within the context of s29(6), the presence of the SRN on the return is sufficient to alert the 'hypothetical officer' to the contents of generic information provided by the scheme provider (in this case the AAG1 - one of the forms required for DOTAS disclosure - which provides detail on the tax thinking behind the scheme).

In manu's case I wonder if there is some deficiency in the DOTAS documentation provided by the scheme provider, and this is why HMRC still feel justified in making their discovery assessment?