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A 2016 case highlights the importance of checking that an enquiry notice issued by HMRC is valid. What happened?

Case facts. In Mabbutt v HMRC 2016 Michael Mabbutt (M) submitted his tax return for the year ended 5 April 2009 on 29 January 2010. HMRC then sent him a letter on 17 January 2011 which said: “Thank you for your tax return for the year ended 6 April 2009. I am writing to tell you that I intend to enquire into this return.” Now, the enquiry was in time - HMRC has twelve months from the date the return is filed to raise an enquiry. However, hopefully you’ve spotted HMRC’s glaring error. The letter appeared to attempt to open an enquiry into a non-existent return as there was no such tax year ending 6 April 2009 (of course, it should have been 5 April 2009).

So was it a valid enquiry? HMRC tried to argue that it was only a minor error in the notice which should be insufficient to invalidate it. However, the taxpayer disagreed and the First-tier Tribunal agreed with him. The tribunal held that, to be valid, a notice of enquiry must clearly show which return is being enquired into, i.e. the detail as to the relevant return must be correct. As the enquiry notice was for a tax year that does not exist, the enquiry notice could not be valid. A result for M who had entered into a tax avoidance scheme and the difference between his and HMRC’s tax calculations was approximately £653,000!

Tip. If you receive an enquiry notice from HMRC, check it carefully to ensure that it is: (1) issued in time and; (2) clearly states which return is being enquired into.

A taxpayer successfully argued that an enquiry notice was invalid as HMRC had issued it for the tax year ending 6 April 2009 instead of 5 April 2009. If you receive an enquiry notice, check it carefully for errors.

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