Reason to suspect there is underassessed tax

In 2005 the taxpayers a husband and wife gifted a house to their son but kept the land surrounding it which they used in their business. In 2007 they sold the land to a property developer and claimed business asset taper relief. They reported both disposals in their returns for 2005-06 and 2007-08.

In 2015 HMRC opened an enquiry and issued information notices under FA 2008 Sch 36. The taxpayers appealed but HMRC withdrew from the case saying it was no longer defending it without explaining why. A few months later HMRC issued further information notices against which the taxpayers also appealed. 

The First-tier Tribunal said the doctrine of res judicata did not apply because there had been no determination by the tribunal. Further taking into account the facts and circumstances there was no abuse of process. The judge said HMRC’s...