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Where Taxpayers and Advisers Meet

Can HMRC make an Assessment if no tax to pay?

SteLacca
Posts: 426
Joined: Fri Aug 07, 2015 2:17 pm

Re: Can HMRC make an Assessment if no tax to pay?

Postby SteLacca » Wed Oct 18, 2017 1:20 pm

That is exactly the point that I have been trying to make. Not that your actions now leave you exposed to penalties, but that HMRC will enquire when you utilise those losses, and that is the Return that will contain deliberate inaccuracies.
Sorry, but that is simply wrong. If the losses have not been previously used, there will not be an inaccuracy, let alone a delibnerate one. It is for HMRC to show that a gain has been made and the losses have been used. If they fail to do this before the next return is submitted, the return will be correct and the point that is submitted.
No, it isn't. I am not referring to current Returns, but a future Return when the "loss" is utilised even though it does not exist. At that point, a known inaccurate Return is submitted.

bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Can HMRC make an Assessment if no tax to pay?

Postby bd6759 » Wed Oct 18, 2017 1:39 pm

No, it isn't. I am not referring to current Returns, but a future Return when the "loss" is utilised even though it does not exist. At that point, a known inaccurate Return is submitted.
You are going on the assumption that HMRCs assertion that there has been a gain is correct. If their view cannot be enforced by making an appealable decision, then the loss has not been used, and any subsequent use of that loss will be correct.

This whole threard is about how they enforce their view. The time limit for them enquiring into the return has passed. The question is how the discovery provisions interact with the loss. Comments about deliberate penalties some time in the future for using a loss that has not already been used are irrelevant and nonsensical. The inaccuracy, if it exists, is in the 2015 tax return. How should HMRC fix that inaccuracy?

hombre contento
Posts: 13
Joined: Tue Oct 03, 2017 10:22 pm

Re: Can HMRC make an Assessment if no tax to pay?

Postby hombre contento » Tue Oct 31, 2017 10:08 pm

Latest update. I replied to HMRC asking for them to clarify the correct procedure to follow. As you know, the original question asked in this post was whether an Assessment could be raised in this case as I believed that the period for an Enquiry had passed by the time I received a letter from HMRC. However, in their reply, they state that "a S9A Enquiry notice was issued on 11 Jan 2017." So, in fact, the first issue to settle seems to be whether this Enquiry notice was validly issued.
I definitely did not receive this letter, have not moved house recently and have not had any trouble with any other HMRC letters about this case or ordinary course matters. The letter I did receive on 2nd March refers to writing to me on 11th January "and my agent" in order to "ask for some information." So, I have a number of questions arising from all of this, for which any guidance welcome:
1) I understand HMRC don't have to prove receipt, so what level of proof do they have to show that it was actually sent? Can I ask them to prove it was actually posted? It seems odd to me that in their letter of 2nd March they didn't just attach the 11th Jan letter and I still haven't seen it. I presume I should therefore at the very least ask to see a copy of that letter.
2) can we settle the issue of whether it was sent by reference to the advisor referred to. I have asked them twice who was the advisor they sent it to but they have not responded. I think it was KPMG as they used to act for me some time ago. I presume if KPMG received a notice of Enquiry about someone that was not a current client, they would not just throw it away, but probably would return it to HMRC. Can I pursue this line to ask them to prove that the advisor received the letter, even if I didn't?
3) the 2nd March letter refers to the 11th Jan letter "asking for some information". That certainly doesn't sound like a notice of Enquiry to me. Surely, if it was, they would have stated that clearly in the 2nd March letter and would have described it differently. In a subsequent letter, they stated there is NOT an open Enquiry and they don't intend to open an Enquiry. All very confusing.
Welcome any further thoughts. Given the nature of the issue has changed from what I originally posted, I think i might start a new post under a corrected headline to see what other views emerge. Many thanks again for your help to date.

bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Can HMRC make an Assessment if no tax to pay?

Postby bd6759 » Tue Oct 31, 2017 11:26 pm

The only other point I can make in that if there was an open enquiry, why are HMRC asking you to amend he return? Any amendment you make cannot take effect whilst the enquiry is open. It us up to HMRC to amend the return to give effect to their enquiry conclusions and to give effect to your amendment (unless they deal with your amendment in their conclusions). Either way, it is in their power to amend the return so why aren't they?

wamstax
Posts: 1844
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Can HMRC make an Assessment if no tax to pay?

Postby wamstax » Sat Dec 02, 2017 3:02 am

I HAve responded to the Op on clearly another aspect of this case before seeing this and can now understand why he is fighting on technicalities. Whether or not HMRC Have opened an enquiry it seems beyond doubt that an officer will have discovered that a gain that should have been assessed for 2014-15 has not been assessed and in that event if I was sitting on the other side I would just issue the assessment to the best of my judgement and ability (under the discovery provisions -clearly within 4 years of the end of the 2014-15 year of assessment and also presumably with new information being discovered by the officer or a different view taken within 4 years) and leave the taxpayer ( or non-taxpayer) to prove that the assessment is estimated or excessive for specific grounds of appeal. Unfortunately- and while I try not to prejudge matters I think the OP. has been caught with his trousers down and is now wriggling with HMRC bending over backwards to act fairly.

Clearly the OP needs to take professional advice before the circumstances end up before the FTT with practitioners asking how that case ever got there. The OP. Will no doubt consider his position before deciding which way to go on either amending his return or fighting it all the way.

In all this my one question is why if he was married was the property not also his main residence given that there can only be one PPR ( ok don’t jump on me I’m aware of the many potential reasons) for a married couple. Everything needs to be looked at thoroughly before jumping one way or the other
regards and hope this helps
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bd6759
Posts: 2965
Joined: Sat Feb 01, 2014 3:26 pm

Re: Can HMRC make an Assessment if no tax to pay?

Postby bd6759 » Sat Dec 02, 2017 2:24 pm

Bill

I don't think HMRC are bending over at all. I think that the officer here doesn't have a clue. If there were an open enquiry, why would the Officer ask the OP to amend the return, when that Officer should know the return cannot be amended during an enquiry. Indeed, if this was the crux of the enquiry, then why not simply issue a closure notice.

As for discovery, the Officer can only make an asessment to make good a loss of tax. s29(1) TMA 1970 is clear about this.
...the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax.
There is no amount to assess and no loss of tax here. The gain, if there is a gain, is covered by losses. Losses do not need be claimed in order to be used - there is no option other than to use them if gain araises. HMRC are aware of the losses, therefore they cannot make an assessment to make good a loss of tax. The assessment would be invalid regardless of the technicalities as to whether there was a gain or not.

This is a case where HMRC had to open an enquiry within the time allowed. It seems that they did so, but HMRC have subsequently confused matters, first by saying that this was not an enquiry and then by asking the OP to amend his return. HMRCs remedy here is to issue a closure notice under s28A TMA.

wamstax
Posts: 1844
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Can HMRC make an Assessment if no tax to pay?

Postby wamstax » Sat Dec 02, 2017 3:42 pm

Hi bd as you will gather I have been off site for a good few months and just came back to answer the OP on another but connected thread without seeing this thread that reflected matters as more complex than initially thought. The dangers of giving views without knowing all the detailed facts.

Anyway as I said in final para all needs to be considered in detail and OP would be well advised to seek professional help before relying on views that may not be taking into account all twists and facts. HMRC might think there was no enquiry if for example they considered that they had concluded their enquiry and issued their decision (rightly or wrongly).
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website


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