The Upper Tribunal (UKUT) has dismissed an appeal against a discovery assessment in relation to a property sale (Harrison v HMRC [2023] UKUT 38 (TCC)).
On the facts, the UKUT concluded that HMRC “did discharge the burden of establishing that they made a discovery within the terms of section 29(1)” of TMA 1970.
The UKUT also considered the question of “staleness”, with reference to the 2019 Court of Appeal decision in Tooth. This in turn involved an analysis of the attention that should be paid by a court to obiter, which was summarised as follows:
“We agree that:
(1) Applying a conventional approach to the distinction between ratio and obiter dicta, the comments regarding newness in Tooth CA were part of the ratio in that case, and the comments regarding staleness in Tooth SC were obiter.
(2) This Tribunal is bound by decisions of the Court of Appeal and Supreme Court.
(3) As a matter of general principle, obiter dicta are not binding.
However, we do not accept that it follows inexorably from this that this Tribunal must simply close its mind to the pronouncements on staleness in Tooth SC. We would be failing in our duty if we were to do so. We therefore begin by considering what was said on that issue by the Supreme Court, and the terms on which those statements were expressed.”
The UKUT concluded as follows:
“We do not accept that, notwithstanding Tooth SC, the doctrine of staleness is, like Monty Python’s parrot, “not dead, only sleeping”. It is deceased. Given our decision, we do not need to, and do not, decide whether on the facts the discovery in this case would have been stale.”
Finally, the UKUT considered the quantum of the assessment, and specifically whether the FTT had conflated profits with revenue. Once more, however, the appeal on this point was rejected, as the FTT had reached a conclusion that it was entitled to reach.
https://www.bailii.org/uk/cases/UKUT/TCC/2023/38.pdf
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.
