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In September 2005, HMRC issued assessments to the taxpayer on the basis that royalty payments he received constituted Case I, II or VI income.
The taxpayer appealed saying that the assessments did not meet the conditions of TMA 1970, s 114. His appeal was dismissed, so he applied successfully to have the appeal heard by the Upper Tribunal (Tax and Chancery Chamber).
He claimed that the assessments were invalid because they were not made in a prescribed form according to s 113(3), and they did not state they were made under s 29.
The Upper Tribunal said that the letter preceding the issue of the assessments stated clearly that the charge to tax was under Case I, II or VI of Schedule D. It did not matter whether a named officer was area director or group director and there was no requirement for an assessment number or taxpayer number to be provided. The assessments were valid.
The taxpayer’s appeal was dismissed.
With regard to costs, the taxpayer asked for these to be borne by HMRC.
The tribunal said that having failed to persuade the First-tier Tribunal to review its decision and having been granted permission to appeal, the appellant should have then applied to the Upper Tribunal to remit the appeal to the First-tier Tribunal for it to make a decision on the validity aspects that had been argued, but on which no decision had been given. In that way there would have been no costs of substance in the Upper Tribunal.
However, given that it did hear the appeal, the Upper Tribunal considered that costs should follow the normal course of events and awarded them in favour of HMRC.
