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During 2006/07 the three taxpayers entered into an avoidance scheme involving life assurance designed to create allowable losses to offset against capital gains.
The arrangements were reported to HMRC under the disclosure of tax avoidance schemes (DOTAS) regime. The department allocated a scheme reference number that the taxpayers included in their tax returns for the year.
As a result of the Court of Appeal’s decision against the taxpayer in Drummond v CRC [2009] STC 2206 which involved a similar scheme the Revenue decided the scheme in the instant case was ineffective and raised discovery assessments.
The taxpayers appealed.
The First-tier Tribunal allowed the appeal on the basis the HMRC officer who dealt with the returns should have acted upon the scheme reference number. Although there had been a discovery within TMA 1970 s 29(1) the conditions in s 29(5) were not satisfied.
HMRC appealed.
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