This week's opinion: 18 April 2019

The decision of the Supreme Court in Derry (tinyurl.com/scderry) emphasises the need for a review of TMA 1970. This is the latest decision in the long-running dispute, started in the Cotter case, about the correct mechanism for making claims for relief carried back to earlier years and how HMRC should enquire into them. We will publish an analysis of the case in a future issue but it is worth reflecting on how much of a can of worms this and the preceding cases have opened, not only about the operation of the act but also how HMRC’s computer systems are aligned – or not – with its provisions. Two quotes from the judgment show the extent of the problem:

‘Having taken such care to walk the taxpayer through the process of giving effect to his entitlement as part of his tax liability for the year specified by him, it would seem extraordinary for that to be taken away, without any direct reference or signpost, by a provision in a relatively obscure schedule of another statute concerned principally, not with liability, but with management of the tax.’

‘There is an urgent need for clarification, not only of the precise legal status of the different parts of the return, but also of any relevant differences between the paper and electronic versions of the return, and their practical consequences.’

Surely the time has come for an overhaul of the taxes management provisions. This should then feed into the way HMRC’s online tax return processes work. It should not take a trip to the Supreme Court for a taxpayer to know whether he has put entries in the correct box on his return.

If you do one thing…

There is no appeal against an information notice issued under FA 2008, Sch 36 when the documents form part of the taxpayer’s statutory records. The decision in CPR Commercials (TC7066) has a useful discussion on how the test works.