When a self-assessment return is amended, any enquiry notice must be given (meaning, in this context, ‘received’!) within twelve months of the quarter-day following the date on which the amendment is made.
The recent case of Dennison v HMRC [2024] UKFTT 364 (TC), in which the First-tier Tribunal had to investigate both the date on which the amendment was made and that on which HMRC’s notice of enquiry was received, is instructive.
The Interpretation Act 1978 provides that if a document is properly addressed, stamped and posted, it is assumed to have been delivered ‘at the time at which the letter would be delivered in the ordinary course of post’ unless the contrary is proved.
The law does not define what delivery ‘in the ordinary course of post’ means. The FTT considered various items of evidence ranging from a Practice Direction issued by the former Queen’s Bench Division (‘QBD’) in 1985 to Royal Mail’s website and service description (described by the FTT as ‘aspirational’) and some limited evidence of what happens in practice.
In the event, the FTT held that any presumption as to the date on which the taxpayer’s amendment, posted first class on 28 April, was received by HMRC was displaced by the fact that HMRC date-stamped it as received on 4 May. As a result, HMRC had until 31 July 2012 to give notice of enquiry.
In determining whether or not they did so, the FTT had to consider not only the vagaries of the ‘ordinary course of post’ but also the fact that HMRC sometimes (perhaps even often) don’t dispatch a letter until the day after the date printed on it. It was influenced by the QBD Practice Direction to the effect that first class mail is to be treated as delivered on the second working day after posting and second class mail, on the fourth, counting working days as Monday to Friday, excluding any bank holiday. Thus the enquiry notice (dated Friday 27 July 2012 and even if posted on that date) was not deemed delivered by 31 July 2012 and the enquiry was out of time.
Two points.
First, and most important, it is worth recording the date on which any correspondence from HMRC is received. It might be important.
Second, and more worrying, HMRC asserted that even if the written notice had not been given in time, the enquiry remained valid because ‘notice of intention to enquire into the return was given in a telephone conversation between HMRC and Mr Dennison’s then agents on 27 July 2012.’ In fact, as HMRC’s own guidance confirms, ‘Where there is any requirement in the Income Tax and Corporation Taxes Acts for HMRC to ‘give notice’, the notice must be in writing where it relates to Income Tax, Capital Gains Tax, Corporation Tax’. Either the officer presenting the case was ignorant of the law and his employer’s instructions or he was aware of them and misrepresented the position to the FTT. Neither is acceptable.
For more information on HMRC enquiry notices and how to respond to them, please get in touch with your usual BKL contact or use our enquiry form.