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HMRC claimed that certain sums in a firm's tax returns were the personal liabilities of one of the firm's partners. They amended the returns on the basis that the partner had been negligent.
The firm's appeal to the Special Commissioners was dismissed. It later made a CPR Pt 36 offer to settle the appeal on the basis that HMRC would withdraw the amendment. No mention was made of penalties though.
HMRC accepted the settlement offer, but subsequently made a penalty determination.
The firm appealed on the ground that HMRC had not honoured the terms of the settlement.
In the High Court, Mr Justice Warren said that the settlement did not preclude the making of a penalty determination. HMRC had only agreed to withdraw the amendment.
The firm's application was dismissed.
