The First-tier Tribunal has allowed Mr Robson’s appeal against discovery assessments under TMA 1970, s. 29 raised in relation to fraudulent claims for EIS relief allegedly made on his behalf by Capital Allowances Consultants Ltd (CACL). The tribunal judged that CACL was not the authorised agent of Mr Robson. “That being so, the return cannot be deemed to have been submitted on behalf of Mr Robson. As s29 TMA requires the filing of a return the statutory requirements are not satisfied.” (Robson v HMRC  UKFTT 226 (TC)).
Mr Robson worked offshore and due to the erratic pay structure of his work and bonus payments believed he was due a tax rebate and had received similar payments in the past. He had contacted CACL, which had been recommended to him by a colleague, and believing it to be regulated by the ATT provided it with an agent’s authorisation code requesting it to process his rebate. The company fraudulently claimed EIS investment relief but remitted to Mr Robson only a minimal amount of the repayment made by HMRC (the amount he understood to be owed by way of rebate).
HMRC raised discovery assessments in respect of the fraudulent claims. Mr Robson appealed these maintaining that he did not submit a SATR nor did he request, instruct or authorise CACL to do so. The correspondence had referred to “an investment” but as, on starting the job he had attended a seminar that said that Amec (his employer) would “invest” in its employees, he had understood this to refer to his employer. CACL had also advised him that the reference to investment was “legal jargon” that should not concern him. The email chain between Mr Robson and CACL was briefly headed “tax return” but had begun with “tax rebate” and returned to this heading later in the correspondence. The emails themselves continued to refer to a rebate.
Mr Robson had reported the company to the Serious Fraud Office and had a police crime reference number. He was not the only taxpayer affected by CACL’s actions, there being eight separate taxpayers who had appealed in similar circumstances.
The tribunal judge concluded:
“I accepted Mr Robson’s evidence and in doing so I accepted that he was content for CACL to assist him in a tax rebate claim. CACL was not authorised to submit a SATR or make a fraudulent claim for EIS relief about which the Appellant was wholly unaware. He could not check, nor did he carelessly omit to check the returns because he knew nothing about them. … I am satisfied that Mr Robson had not seen the return, he had not confirmed the accuracy of its contents and he had not given authority for its submission. … I rejected HMRC’s submissions that the email correspondence showed that Mr Robson knew a SATR was to be submitted on his behalf and that he authorised CLAC [sic] to do so … I do not consider the fact that the email chain heading changes to “tax return” or the reference to an investment are sufficient when viewed against Mr Robson’s honest and credible evidence to demonstrate that Mr Robson knew a SATR would be submitted or that he authorised it.”
Although not affecting the final judgment it was also considered whether the discovery assessments were valid as HMRC had suspicions about CACL within the normal enquiry window but the assessments on Mr Robson were not raised until after the window had closed. However, applying HMRC v Tooth  UKSC 17, which stated “…the question whether there is a discovery for the purposes of section 29(1) depends upon the state of mind of the individual officer of the Revenue who decides to make the assessment. For these purposes there is no concept of the Revenue having collective knowledge such that if one officer makes a discovery that is to be regarded as a discovery made once and for all by the Revenue as a whole”, the judge noted that:
“It may well be that HMRC knew prior to meeting with Mr Robson that the EIS relief claims on his SATRs were likely to be false. However, that is not what the law requires … I accepted Mr Barclay’s evidence that he made a discovery once he had looked at the returns and established that Mr Robson was not eligible for EIS relief. By that point Mr Barclay had ceased to be entitled to open an enquiry and could not have been reasonably expected to be aware of the insufficiency to tax as he had not had sight of Mr Robson’s returns or the claims contained therein, nor was he aware of the fact that Mr Robson was not eligible for relief. In those circumstances I am satisfied that the condition is met.”
The judge also considered whether Mr Robson and CACL had been “careless”. She concluded neither had. Mr Robson had “acted reasonably and diligently”. With regard to CACL “In circumstances where, on the material before me, it appears that a fraud has been perpetrated I do not accept that the actions of CACL can be described as merely ‘careless’ ”.
She also noted in respect of CACL “As HMRC did not plead its case on the basis of deliberate I make no findings in that regard.”
Related content from Claritax Books
Discovery Assessments, by tax barrister Keith Gordon, is a detailed, clearly written guide to the law and practice in this area. Based on the author’s personal involvement in many leading cases, the book contains much practical advice explaining when and how such assessments may be challenged.