In the case of The King, on the application of Rokos v HMRC [2026] EWHC 733 (Admin), the High Court has judged that amendments to Mr Rokos’ personal tax returns to remove sideways loss relief arising from failed film partnerships tax avoidance schemes (“Trojan” and “Invicta”) were lawful.
Mr Rokos had argued that the amendments to his personal returns were unlawful because HMRC had not made valid enquiries into the partnership tax returns as they had failed to notify such enquiries in accordance with the requirements in section TMA 1970, s. 12AC. The effect of this was that the personal returns retained the benefit of the partnership losses because, if there had been no initial enquiry opened, it was not possible for the amendment mechanism to operate in order to deny relief. However, the High Court did not agree, summarising the issues and their conclusions as follows:
“SUMMARY OF CONCLUSIONS
The conclusions on those issues that remain are set out above.
(i) What did the statute require? (The statutory interpretation point);
Answer: Statute required that HMRC can show either:
(a) The nominated partner received notification in writing in time of the intention to enquire, (which need not be in strictly compliant format) or that
(b) The partners’ agent with authority received notification in writing in time of the intention to enquire, (which need not be in strictly compliant format) or
(c) The individual partner whose affairs are under question received notification in writing in time (which need not be addressed particularly to him as long as it notifies as to the partnership)
(ii) Is it more likely than not there was direct notification of an enquiry such that the statutory requirement at (i) was satisfied? (The agency point);
Answer: Yes, in this case there was notification to the authorised agents of the partnerships in each case.
(iii) Is it more likely than not there was indirect notification or knowledge that satisfies the statutory purpose of the section? (The indirect notification or knowledge point);
Answer: Indirect notification, i.e. notification to another person is not in and of itself, notification to a taxpayer under the statute, however, HMRC may prove it is more likely than not the taxpayer was notified in writing, although addressed to another by reference to evidence of the position with other partner taxpayers.
(iv) Even if wrong, will the court treat the notice as having been properly served because a taxpayer who themselves does not fulfil the statutory requirements, cannot require it of HMRC? (The remedy question)
Answer: It may do; or it may refuse relief to the claimant in certain circumstances.
Overarching Conclusion
Were the Notices addressed by HMRC to the Claimant issued ultra vires?
No they were not. In each case there was actual authority to receive notice of the fact of the enquiry into the partnership accounts under section 12 TMA 1970. This was given to IMIL [Ingenious Media Plc] for Trojan, and to ICL [Invicta Capital Ltd] for Invicta 41 in the Agency Agreements described above.”
https://www.bailii.org/ew/cases/EWHC/Admin/2026/733.html
Related content from Claritax Books
Taxation of Partnerships, by Paul Howard, addresses all the key taxes that arise for partnerships – income tax, CGT, SDLT, corporation tax. The book includes full reference to statutory provisions and also to HMRC practice and interpretations.
