Upper Tribunal decision on SDLT closure notices - KPMG United Kingdom
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Upper Tribunal decision on SDLT closure notices

Upper Tribunal decision on SDLT closure notices

The case considered whether the taxpayers were entitled to closure notices without providing information that HMRC had requested.


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The Upper Tribunal (UT) have refused the taxpayer’s appeal for the closure of HMRC enquiries into their Stamp Duty Land Tax (SDLT) returns in respect of a marketed tax arrangement which was similar to Project Blue. Following the First-tier Tribunal (FTT) decision in Project Blue, HMRC wrote to a number of taxpayers with a ‘Settlement Invitation’. The letter stated that if they did not settle, then they would need to provide a number of documents to HMRC to allow the case to be taken to tribunal, and gave them 30 days to provide all of the requested documents. The taxpayers in this case did not provide the information requested, and applied for closure notices. HMRC refused to issue closure notices on the basis that the information had not been provided.

The taxpayers’ appeal raised two points of principle relating to the interpretation of the legislation. On the first, the UT held that the Tribunal has discretion as to the period specified for closure of an enquiry and is not limited to the period specified in the application, but that the FTT’s comments on this point were not material to its decision. On the second, it agreed with the FTT that the Tribunal cannot set a time-frame for closure which is dependent on the production of outstanding documents and information.

The remaining ground of appeal was that the FTT erred in law because the only reasonable conclusion to be drawn from HMRC’s investigation into the SDLT planning was that they had sufficient information and knowledge to give a closure notice to each of the appellants. The UT rejected this argument, finding that the Settlement Invitation letters did nothing more than invite the taxpayers to settle on the basis of the FTT and UT decisions in the Project Blue case.

The UT also disagreed that the letters gave the impression that HMRC had sufficient information to close the enquiries, finding that the letters made it clear that further information, specific to the cases of the appellants, would be required. HMRC should now have more confidence in using these ‘nudge’ letters without the risk of having to close their enquiries.

For further information please contact:

Chris Davidson

Stephen Whitehead

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