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Procedure.Tax
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G11: Notification of assessment
General requirements
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“… the taxpayer is entitled to be informed in reasonably clear terms of the effect of the assessment …” (International Language Centres Ltd v. CEC [1983] STC 394 at 398).
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“…in judging the validity of notification, the test is whether the relevant documents contain between them, in unambiguous and reasonably clear terms, a notification to the taxpayer containing (a) the taxpayer’s name, (b) the amount of tax due, (c) the reason for the assessment, and (d) the period of time to which it relates.” (Queenspice v. HMRC [2011] UKUT 111 (TCC), §25(iii)).
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“…in my opinion the decisions relating to notification for VAT purposes support the proposition that the appropriate approach is that set out in the Court of Appeal’s decision in House. That test, effectively building on the formulation in International Language Centres, is whether or not the taxpayer has been given a sufficiently clear explanation, in reasonably clear terms, of the effect of the assessment.” (Abbey Forwarding Ltd v. HMRC [2017] UKFTT 228 (TC), §87, Judge Thomas Scott).
Errors​
Error in notification does not prevent proper notification if error readily identifiable
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“As was made clear in House, in determining whether a taxpayer has been informed of the effect of the assessment in reasonably clear terms, an element of common sense must be applied. No reasonable person, knowing the circumstances under which the notice of assessment had come to be issued, and having regard to the terms of the notice as a whole, could have failed to understand that the description of Box 5 was an error, and that the true position, as evidenced by Boxes 1, 4 and 7, the simple arithmetical calculation required in arriving at an amount to be included as payable in Box 5 and the page 2 description of the amount of £5,666.66 as being payable in respect of period 12/08 was that this was notice of an assessment in that sum.” (Romasave (Property Services) Ltd v. HMRC [2015] UKUT 254 (TCC), §78, Judges Berner and Falk).
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Incorrect company number does not prevent notification
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“I find that the assessment of 27 June clearly stated the taxpayer’s name; it was clearly a notification to the taxpayer. It was sent to the right address. While it contained the wrong company registration number, there could be no doubt of the intended recipient as the name and address were correct.” (Foneshops Ltd v. HMRC [2015] UKFTT 410 (TC), §73).
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Notifying partnership instead of company does prevent notification
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“In Queenspice Lord Pentland set out four requirements for a valid notification. One of these is that it shows the name of the taxpayer, not only in “reasonably clear terms” but in “unambiguous and reasonably clear terms”. That requirement is not met by notifying penalties to the officers of a limited company instead of to a partnership with a similar name, even one at the same address. It follows that, as Mr Hansen said, the original Notices were defective.” (Teletape (a firm) v. HMRC [2016] UKFTT 797 (TC), §57, Judge Redston).
No mandatory method of notification (probably)
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“Section 73 itself, however, prescribes no requirements for the method by which notification may be given. The only provision which does so is s 98, and then only in respect of postal notification. That provision, as both parties now accept, is permissive and not mandatory.” (Romasave (Property Services) Ltd v. HMRC [2015] UKUT 254 (TCC), §28, Judges Berner and Falk).
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“I would observe here, given that I have derived substantial assistance from the decision of Judges Berner and Falk in Romasave, that I have some doubts about whether their view that the postal service rules in s 98 Value Added Tax Act 1994 are permissive reads across to s 115(2) TMA, given the history of that subsection. But in view of my findings it is not necessary to air them, or to consider whether I am bound by Romasave on that matter.” (Patrick v. HMRC [2015] UKFTT 508 (TC), §67).
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May be notified through combination of more than one document
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“We find that the requirements for notification were met by a combination of the original Notices and Officer Lahi’s letter of apology dated 27 August 2015. That letter made it clear that the Notices were intended for Teletape and that “charges have been raised” under the VAT registration number for the partnership.” (Teletape (a firm) v. HMRC [2016] UKFTT 797 (TC), §60, Judge Redston).
Notification through an agent specifically authorised to accept notification of assessments
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“We do not accept [HMRC’s] submission that in circumstances where a taxpayer’s solicitor has requested copies of assessments and has received those assessments in response to that request, the taxpayer has been notified as required by s 73 VATA. That proposition in our view runs contrary to the authorities which make it clear that a solicitor has no such general authority to receive such notification on behalf of his client. It is only if there is authority that extends to the receipt of such notification that it will be capable of constituting notification for the purpose of s 73. Nor does the fact that Anami Law dealt with the assessments once copies had been sent to them give any indication that they had authority to receive notification of them on behalf of Romasave; to the contrary, Anami Law sought withdrawal of the assessments on the ground that they had not been properly notified.” (Romasave (Property Services) Ltd v. HMRC [2015] UKUT 254 (TCC), §61, Judges Berner and Falk).
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“It is equally clear that the mere fact that King & King acted as accountants for Romasave did not give them authority to receive notification of the assessments on behalf of Romasave.” (Romasave (Property Services) Ltd v. HMRC [2015] UKUT 254 (TCC), §63, Judges Berner and Falk).
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Agent may only authorise notification at a different address if it has authority to accept notification
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“Although we accept that a taxpayer may direct that notification may be given to him by sending the relevant documents to a particular address, and that an agent with authority to receive notification may provide an alternative address for notification to the agent itself, the necessary authority is lacking when an agent merely provides an address of a third party, and the relevant correspondence is sent to that third party, unless that third party is itself authorised to receive notification.” (Romasave (Property Services) Ltd v. HMRC [2015] UKUT 254 (TCC), §63, Judges Berner and Falk).
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Not sufficient that T receives the document – must be the case that T knew or ought to have known of its content
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“So I would summarise my view by saying that, on a fair and just interpretation of the language used in rule 10(1)(c)(ii) of the Tribunal Rules, notice can be said to be received for the purposes of rule 10(1)(c)(ii) of the Tribunal Rules only if the recipient either is actually aware that it has received the notice or ought to be aware that it has received the notice given the circumstances in which the notice was received.” (Clipper Group Holdings Ltd v. HMRC [2016] UKFTT 712 (TC), §41, Judge Beare).
See also: F3: Opening a statutory enquiry
And A5: Communication
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Notification for a prescribed accounting period (VAT)
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It is sufficient that the assessment period can be readily deduced; it does not need to be expressly stated
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“The position is summarised in De Voil Indirect Tax Service, volume 2, page 5-109, where it is said that: “[…] an assessment is unenforceable if no period is stated on the notice unless the relevant prescribed accounting periods are identified in a letter or schedules forming (part of) the notice so that the assessment period can be readily deduced despite the absence of a clear statement setting out the beginning and end of the period…”” (Queenspice v. HMRC [2011] UKUT 111 (TCC), §26).
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“In LSE’s appeal, we find that there was no clear statement in any of the documents comprising the assessment that the period of assessment began on 1 August 2010 and ended on 31 October 2010. Nevertheless, that period could be readily deduced from the statement that HMRC was assessing to recover the payment authorised on 9 September 2010, as that date fell within that period. So we find that the notification of the assessment did contain, in relatively clear terms, the period of time to which the assessment related. And we consider that that is sufficient to satisfy s 73(2) as set out above.” (London School of Economics and Political Science v. HMRC [205] UKFTT 291 (TC), §73).
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Repayments and credits: the prescribed accounting period that need to be notified is the one in which the tax was repaid
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“Our view, having considered the authorities in detail, despite the lack of submissions on them, is that DFS in 2004 had defined in a judgment binding on this Tribunal, that ‘prescribed accounting period’ in s 73(2) and 73(6)(a) meant the period in which the tax was repaid by HMRC (option C). New section 73(6A) did not more than confirm this meaning for s 73(6)(a). There is therefore no ‘contrary intention’ and ‘prescribed accounting period’ has and always has had the same meaning wherever it appears in s 73 and that meaning is Option C.” (London School of Economics and Political Science v. HMRC [205] UKFTT 291 (TC), §53).
Notification of excise duty point (excise duty)
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“In relation to a decision to assess excise duty, such as that arising in this case, in my judgment the critical elements are the identification of an excise duty point, and of the person or persons liable for any resulting excise duty. The excise duty point generally arises and is fixed by reference to a particular movement of goods…In addressing whether or not a decision to assess excise duty has been adequately notified, the taxpayer must therefore be informed, in reasonably clear terms, of the relevant excise duty points, and the movements of goods which gave rise to those duty points.” (Abbey Forwarding Ltd v. HMRC [2017] UKFTT 228 (TC), §87, Judge Thomas Scott).
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Not necessary to state excise duty point if taxpayer can understand the duty point
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“While the documents do not specifically detail the resultant excise duty points, they provide all the information necessary for the taxpayer to understand the excise duty points.” (Abbey Forwarding Ltd v. HMRC [2017] UKFTT 228 (TC), §112, Judge Thomas Scott).
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Incorrect date not a problem if AAD numbers correct
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“Here, given the specified movements of alcohol, with their accompanying AAD numbers, and the information supplied in the HMRC letter, it is simply not credible that Abbey would have understood those movements to give rise to excise duty not when it would have known the movements to have occurred in November and October 2007, but a year later, because of a single error in the trader’s payment copy of the invoice.” (Abbey Forwarding Ltd v. HMRC [2017] UKFTT 228 (TC), §117, Judge Thomas Scott).
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Notification may be set out in a number of related documents
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“The appellant accepted, as indeed it must from the authorities such as House (t/a P & J Autos) [1994] STC 211 (discussed below) at 226j, that notification of an assessment may be set out in a number of related documents, even if those documents do not refer to each other on the face of them, as long as it is clear that they are together intended to comprise the notification of assessment. So in House, a schedule that was not referred to in the VAT 655 but which was referred to in a letter received the same day as the VAT 655, was a part of the assessment. In Queenspice [2011] STC 1457 a letter received some weeks after the VAT 655 was held to comprise part of the notification of the assessment as it was sent expressly to explain the assessment.” (London School of Economics and Political Science v. HMRC [205] UKFTT 291 (TC), §17).
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Mere reference to a document does not incorporate it as part of the assessment
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Our decision is that the letter of 26 August 2010 and its accompanying schedule did not comprise a part of the notification of the assessment. If it had been intended to be a part of the notification, it should have been included with the 4 September 2012 letter, but it was not. Moreover, if a mere reference to an earlier letter in a notification was found to make that earlier letter a part of the notification, there would be no end to the documents which comprised the notification.” (London School of Economics and Political Science v. HMRC [205] UKFTT 291 (TC), §20).
Unenforceable until notified, but may be notified at any time
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“The chairman found that there was no proper notification, but he also held that the result was that the assessment was simply unenforceable unless and until it was notified properly. The point has very little, if any, merit since the taxpayer company plainly got the assessment through their own solicitors, but it is a point which exists and had to be met, and has to be met by me… I conclude that on the facts the chairman was correct and he was correct in his conclusions. The matter could be and indeed, in my judgment, has been rectified by notification now. There has been formal notification in accordance with the 1983 Act so that any irregularity is cured, and the taxpayer company can no longer have the protection, in my judgment, of that argument.” (Grunwick Processing Laboratories Ltd v. CEC [1986] STC 441 at 441).
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“Clearly NTJ was aware of the penalty when it sent its Notice of Appeal to the Tribunal on 29 April 2016 and in the light of Grunwick, even if not rectified by notification now, the penalty would still have been being valid, although not enforceable, and as such would be an appealable decision within s 83(1)(q) VATA were it not for the failure by HMRC to comply with s 83A VATA.” (NT ADA Ltd v. HMRC [2016] UKFTT 642 (TC), §28).
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“There is no basis for saying that the appellant is not liable to a penalty of £100, simply because he was not notified of the assessment…I do not think however that the failure to notify the assessment can be wholly without consequences. Paragraph 20(2) states that a penalty which has been assessed must be paid before the end of the period of 30 days beginning with the date on which notification of the penalty is “issued”.” (Patrick v. HMRC [2015] UKFTT 508 (TC), §§84…85).
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But VATA surcharge liability notice must be served before penalties can arise
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“I have come firmly to the conclusion that in the present cases it was the intention of Parliament that a warning should be given before a surcharge could be levied. And thus I agree with His Honour Judge Medd's first conclusion.” (CEC v. Medway Draughting & Technical Services Ltd [1989] STC 346).
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“It seems clear therefore from the legislation that if no surcharge liability notice has been served on the Appellant, it cannot be liable for the surcharges for the default periods.” (Kusten Vorland Ltd v. HMRC [2016] UKFTT 818 (TC), §10, Judge Popplewell).
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Burden of proof on HMRC
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“The respondents accept that the initial burden of proof lies with them to show that
(1) VAT was paid late and the liability to the surcharges has been incurred;
(2) valid surcharge liability notices for the default periods were served on the appellant.” (Kusten Vorland Ltd v. HMRC [2016] UKFTT 818 (TC), §22, Judge Popplewell).
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Not sufficient to assert that they would have been served
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“Mrs Rees is unable to provide copies of liability notices which relate, specifically, to the default periods. She provided us with some proformas, and stated that notices including the relevant information "would" have been sent out to the appellant. As Mrs Rees recognises we suspect, this goes nowhere near discharging the respondents burden of proof.” (Kusten Vorland Ltd v. HMRC [2016] UKFTT 818 (TC), §31).
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Notice of assessment functions as surcharge liability notice where earlier notice vacated
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“During the short adjournment, Ms Donnelly was able to obtain a copy of the notice in force for period 06/14, which contains the following paragraph: 'If no surcharge period has been notified to you previously, the period beginning on the date of this notice and ending on DD Month xx YYYY is hereby specified as the surcharge period for the purposes of Section 59 and 59A of the VAT Act 1994.'…The Tribunal is satisfied that the paragraph contained in the notice of assessment for period 06/14 effectively stands in for the purpose and function of the SLN that has been vacated in consequence of the default for 09/13 being cancelled. In other words, there has been effective notice served on the appellant to trigger the surcharge period by the default in relation to 06/14.” (M S Resources LLP v. HMRC [2016] UKFTT 754 (TC), §§41…42, Judge Poon).