A4: Defective form and errors
Direct tax: want of form or errors do not invalidate assessment or other proceedings
Income tax, CGT, corporation tax
"(1) An assessment or determination, warrant or other proceeding which purports to be made in pursuance of any provision of the Taxes Acts shall not be quashed, or deemed to be void or voidable, for want of form, or be affected by reason of a mistake, defect or omission therein, if the same is in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts, and if the person or property charged or intended to be charged or affected thereby is designated therein according to common intent and understanding." (TMA 1970, s.114(1))
"(1) An assessment, determination, notice or other document required to be used in assessing, charging, collecting and levying tax or determining a penalty under this Part must be in accordance with the forms prescribed from time to time by the Board and a document in the form so prescribed and supplied or approved by the Board is valid and effective.
(2) Any such assessment, determination, notice or other document purporting to be made under this Part is not ineffective—
(a) for want of form, or
(b) by reason of any mistake, defect or omission in it,
if it is substantially in conformity with this Part and its intended effect is reasonably ascertainable by the person to whom it is directed.
(3) The validity of an assessment or determination is not affected—
(a) by any mistake in it as to—
(i) the name of a person liable, or
(ii) the amount of the tax charged, or
(b) by reason of any variance between the notice of assessment or determination and the assessment or determination itself." (FA 2003, s.83)
Taxpayer can rely on curing of defective form
 There was no dispute that there is nothing to preclude a taxpayer from relying upon section 114 TMA although it is usually HMRC who rely on the section. Section 114 applies to cure documents, such as purported closure notices, which would otherwise be invalid for “want of form [or because] of a mistake, defect or omission therein, if the same is in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts”. In our view, the absence of key features in the letter of 20 March 2017 such as a statement that the HMRC officer had completed her enquiries and a definitive statement of her conclusions were errors of substance rather than mere want of form. In the letter, the HMRC officer said that there were ongoing discussions between a colleague and the Company about the car benefit charge and that the officer would contact Mr Norton again about his tax liability when those discussions were finalised. This indicated that HMRC had not completed their enquiries or reached a concluded view about Mr Norton’s tax liabilities. The reference to the collection of the additional amounts of tax being suspended pending completion of the discussions also indicates that the amendments notified by the letter were not final. We are forced to conclude that these show that the letter was not in substance and effect a notice of closure in conformity with or according to the intent and meaning of section 9A of the TMA. Accordingly, we dismiss Mr Norton’s appeal on this ground." (Norton v. HMRC  UKUT 48 (TCC), Judge Sinfield and Judge Paines - taxpayer wanted early letter to be closure notice to avoid effect of change in law)
Failure to calculate amount of tax due: saved
"  For my part, I would have little hesitation in concluding that, if the only defect in the notice given to Dr Amrolia were the failure to state the precise amount of tax said to be due, the test under the section would be satisfied. As in Archer, Dr Amrolia's liability could have been easily worked out from the terms of the notice, and neither he nor his advisers can have been in any doubt what he owed HMRC as a result of the 75% reduction in his share of the LLP's trade loss. HMRC's omission to amend his self-assessment by stating this figure would therefore have been a matter of form rather than substance. Archer also establishes that section 114 applies irrespective of the forum in which it is relied on: see  and . The fact that the issue arises in judicial review proceedings is therefore immaterial." (R (oao Amrolia) v. HMRC  EWCA Civ 488, Henderson LJ)
" I do not consider that in reaching that conclusion the judge applied the wrong legal test. On the contrary, applying the test in Donaldson, Mr Archer's liability could have been easily worked out, and he can have been in no doubt what he owed HMRC. He had in addition been informed by the APNs what HMRC asserted was his liability. He could not have been confused or misled. KPMG themselves had said in support of their application to the FTT that there was no amount of tax for 2001/2 which remained uncertain. HMRC's omission to amend his return to accord with their conclusions was, in my judgment, a matter of form rather than substance on the particular facts of this case. I would hold, therefore, that the closure notices were validated by section 114; and that section 114 applies irrespective of the forum in which it is relied on.
 I note also that in Pipe v HMRC at  Henderson J contrasted a mistake made internally by HMRC and a mistake made in giving notification to the taxpayer. In the case of a discrepancy between the notice and the internal assessment, section 114 would operate to cure the mistake in the notice. Although his observations were directed to a previous regime, in substance that is what happened in this case. Mrs Cook did in fact amend Mr Archer's returns and self-assessments on line, but failed to tell him exactly what she had done." (R (oao Archer) v. HMRC  EWCA Civ 1962, Lewison LJ)
Failure to state period of default to which decision relates: saved if it can be worked out
" ... Section 114(1) is expressed in wide terms. It captures a notice "affected by reason of a mistake, defect or omission therein" (emphasis added). Thus, the mere fact that the notice omitted to state the period cannot be determinative. An omission to state the period is saved by section 114(1) if the notice is "in substance and effect in conformity with or according to the intent and meaning of the Taxes Acts". In Pipe v Revenue and Customs Commissioners  STC 1911 at para 51, Henderson J said that a mistake may be too fundamental or gross to fall within the scope of the subsection. I agree. The same applies to omissions.
 In my view, the failure to state the period in the notice of assessment in the present case falls within the scope of section 114(1). Although the period was not stated, it could be worked out without difficulty. The notice identified the tax year as 2010-11. Mr Donaldson had been told that, if he filed a paper return (as he did), the filing date was 31 October 2011. The SA Reminder document informed him that, since he had not filed his return by the filing date, he had incurred a penalty of £100. It also informed him that, if he did not file his return by 31 January 2012, he would be charged a £10 daily penalty for every day the return was outstanding. This information was reflected in the notice of assessment. Mr Donaldson could have been in no doubt as to the period over which he had incurred a liability for daily penalty. He knew that the start date for the period of daily penalty was 1 February 2012 and the notice of assessment told him that the end date of the period was 90 days later. The omission of the period from the notice was, therefore, one of form and not substance. Mr Donaldson was not misled or confused by the omission. The effect of section 114(1) is that the omission does not affect the validity of the notice. I do not, therefore, need to consider the further argument advanced by Mr Vallat based on section 114(2) of TMA." (Donaldson v. HMRC  EWCA Civ 761, Lord Dyson MR)
Would not be saved where it could mislead
 It can be seen at once, with the benefit of hindsight, that the specified period of 14 days from 15 April to 28 April 2004 in respect of which the daily penalty of £60 was purportedly imposed must have been a mistake, and that the period which Mrs Mosley meant to specify was obviously 15 September to 28 September 2004. There was no jurisdiction to impose a daily penalty for the 14 days in April, because no direction under section 93(3) had been obtained or notified to Mrs Pipe before the beginning of that period. On the other hand, a direction had been obtained on 7 September, Mrs Pipe had been notified of it by Miss Parkes' letter to her of 8 September, and she had also been told to expect penalties to be charged without any further warning. Accordingly, she could hardly have been surprised if she had received, under cover of a letter dated 29 September 2004, a penalty notice which referred to a daily penalty of £60 from 15 to 28 September 2004.
...If the case were one where HMRC had to rely on section 114(1) to cure the defect in the Penalty Notices, I would agree with Mr Conolly that the mistake was of too fundamental a nature to fall within the scope of that subsection. It was indeed a gross error, and one that, viewed objectively, might have been misleading, because it could have led the recipient to believe that an earlier determination had been made by the Commissioners in or before April 2004, and that such earlier determination had either not been notified at all or the notification had gone astray." (Pipe v. HMRC  EWHC 646 (Ch), Henderson J (on the facts, the error was in the notice of penalty, not the assessment of penalty and so it was saved by s.114(2))
Incorrect year of assessment stated: not saved
"The relevant fiscal year of assessment is an integral, fundamental part of the assessment itself, I, for my part, find it impossible to read the wording of s 114(1), wide though it is, as justifying in any circumstances the treatment of an assessment made for one fiscal year as an assessment made for another fiscal year. If the Revenue make an assessment for the wrong year, their proper course is to issue a new assessment for the correct year. It is pertinent to observe that s 29(6) of the 1970 Act would preclude them from themselves amending an assessment by substituting a reference to one fiscal year for another." (Baylis v. Gregory 62 TC 1 at 127 see also Pipe v. HMRC  EWHC 646 (Ch), Henderson J at §§25 - 30)
Failure to state conclusions clearly in closure notice: saved
" Adopting the reasoning of Lewison LJ and applying it to the present case, I consider that even though it did not state the officer’s conclusion, the closure notice, was “substantially in conformity” with the legislation and, as a result of the previous correspondence, in particular HMRC’s letter of 9 March 2018, its intended effect which was to deny Mr Merchant and Ms Gater MDR was “reasonably ascertainable by the person to whom it is directed” as can be seen from the Notice of Appeal and the ‘Appellants Fully Particularised Grounds of Appeal’ filed and served by Relatus on 24 May 2019. It therefore follows that the closure notice is effective by virtue of s 83 and therefore valid." (Merchant v. HMRC  UKFTT 299 (TC), Judge Brooks)
Enquiry notice erroneously said it was enquiring into claim rather than amendment to return: saved
" The Appellant’s skeleton argument does not challenge the validity of the 5 August 2019 enquiry notice (as opposed to the closure notice), but HMRC nonetheless acknowledge that it contains an error and seek to defend its validity.
 The error in the enquiry notice is a statement that the enquiry is being conducted pursuant to Schedule 11A FA 2003 into a claim made by AKA for overpayment relief in respect of SDLT. In fact, AKA had not made a claim for overpayment relief pursuant to Schedule 11A, but rather had applied to amend the SDLT return pursuant to paragraph 6 of Schedule 10 FA 2003, and the enquiry was thus in fact to be conducted pursuant to Part 3 of Schedule 10.
 By virtue of s 83(2) FA 2003, this mistake will not invalidate the enquiry notice, provided that the enquiry notice is nonetheless substantially in conformity with Part 4 FA 2003 and its intended effect was reasonably ascertainable by the Appellant.
 The Tribunal is satisfied that apart from this error, the enquiry notice was substantially in conformity with the relevant provisions of the FA 2003.
 The enquiry notice gave the correct details of the property and the unique transaction reference number. The enquiry notice, which was sent following a request made by the Appellant for repayment of an amount of SDLT on the ground that the SDLT return had been incorrectly completed, stated that “I am checking into your claim for overpayment relief regarding their Stamp Duty Land Tax return for the above acquisition”. The Appellant’s agent responded to the enquiry notice on 27 August 2019, providing information that had been requested by HMRC. There is no suggestion in that letter that the agent did not understand what the enquiry was about. On the material before the Tribunal, it is not apparent that there was anything else that AKA could have thought that the enquiry was about. The Tribunal is accordingly satisfied that the intended effect of the enquiry notice was reasonably ascertainable by the Appellant and its agent.
 The Tribunal therefore finds that the enquiry notice was valid." (Ladson Preston Limited v. HMRC  UKFTT 251 (TC), Judge Staker)
Enquiry notice erroneously saying it was enquiring into non-existent amendment to return rather than claim: saved
" The appellant submits that the fact that the enquiry purported to be an enquiry into a nonexistent amendment to the taxpayer’s SDLT return and the fact that it was issued under the wrong statutory provision are errors which are too fundamental to be cured by section 83 Finance Act 2003.
 Having considered section 83 Finance Act 2003, which had not previously been drawn to my attention, and in the light of Raftopoulou and Ladson, I am of the view that section 83 applies in the present case. Apart from the erroneous reference to the amendment of an SDLT return, the enquiry letter was in substantial conformity with the requirements of the 2003 Act. It was clear that the letter was opening an enquiry and that the enquiry concerned SDLT. It contained the correct details of the purchaser, the land concerned, the date of the acquisition and the Unique Transaction Reference Number.
 I also consider that the intended effect of the 1 January 2019 letter was reasonably ascertainable by Cornerstone, to whom it was directed, as the appellant’s agent..." (Smith Homes 9 Limited v. HMRC  UKFTT 5 (TC), Judge McKeever)
Failure to allow taxpayer to decide between different options: not saved
" However, the purported amendment of her self-assessment (on the mistaken assumption that she would now wish to carry back the whole of the reduced loss), and the requirement to pay additional amounts of tax and interest calculated on that basis, were in my view invalid, because they went beyond amendments to her self-assessment which were purely consequential on the reduction in her share of the LLP's allowable loss. Until Dr Ranjit-Singh had been given an opportunity to reconsider the various options open to her under sections 380 and 381 of ICTA 1988, it seems to me that no final amendment to her self-assessment could properly be made, and the deemed enquiry into her personal tax return under section 12AC(6)(a) must have remained open.
 So far as Dr Ranjit-Singh is concerned, I do not think there could be any question, if I have analysed her case correctly, of section 114 saving the day for HMRC. The defects in the notice given to her could not be described as a want of form or omission, because HMRC did not yet have sufficient information to issue a valid closure notice to her, and the notice therefore fell outside what I consider to be the proper scope of section 28B(4)(a). Defects of that nature are matters of substance, not form." (R (oao Amrolia) v. HMRC  EWCA Civ 488, Henderson LJ)
Scope of "other proceedings" in s.114(1)
Includes self-assessment, notice to file, notice of enquiry and notice of withdrawal of approval of pension scheme
" TMA s 113 thus also refers to “assessment”, to “determination” (albeit limited to penalties), and to “warrant”, in the same sequence as in TMA s 114(1). In TMA s 114 the three terms “assessment, determination and warrant” are followed only by the term “other proceeding”, whereas in TMA s 113 the list continues with “notice of assessment, of determination or of demand, or other document required to be used in assessing, charging, collecting and levying tax or determining a penalty…”
 It is thus reasonable to infer that by “other proceeding” the draftsman was using a shorthand for the list of documents set out in TMA s 113.
 If this is correct, then an SA tax return would be an “other proceeding” as it is a “document required to be used in assessing…tax”. A Notice to File takes the place of an SA return for those who are expected to file online. If it is correct that an SA return is an “other proceeding”, then it must also be correct that a Notice to File such a return falls within TMA s 114(1).
 Other decisions of this Tribunal provide support for this conclusion. In Mander Pension Trustees Ltd v R&C Commrs  SFTD 322 at , the Tribunal (Judge Mosedale and Mr Collard) held that a Notice of withdrawal of approval from a pension scheme was an “other proceeding” within the meaning of TMA s 114(1). In UK Co v R&C Commrs  SFTD 72, the Tribunal (Judges Kempster and Demack) held at  that the term “other proceeding” was wide enough to encompass a Notice of enquiry into a corporation tax return."
 I find, in conformity with those decisions and taking into account the statutory context as well as the wide dictionary definition, that a Notice to File an SA return is an “other proceeding” and so within the scope of TMA s 114(1)." (McGuiness v. HMRC  UKFTT 88 (TC), Judge Anne Redston)
S.114 can (probably) apply to save some taxpayer documents
" We will not decide whether, as a matter of principle, s114 of TMA applies only to documents and other proceedings emanating from HMRC or whether it can also apply to documents that taxpayers send to HMRC. Tax law provides for HMRC and taxpayers to send a wide variety of documents, assessments and claims to each other and, in those circumstances, a general pronouncement as to the scope of s114 could turn out to be unfair or inadequate in particular cases.
 We accept Ms Shaw’s submission, that is supported by paragraph 34 of Lewison LJ’s judgment in Archer, that “other proceedings” for the purpose of s114 include “every document required to be used in assessing, charging, collecting and levying tax” for the purposes of s113(3) of TMA." (GLL BVK International Immobilien Spezialfonds v. HMRC  UKUT 17 (TCC), Judge Jonathan Richards and Judge Thomas Scott)
" In McGuiness v HMRC  UKFTT 88 (TC), the Tribunal, having observed, at  that it was “reasonable to infer” that the draftsman was using the expression “other proceedings” as a shorthand for the list of documents set out in s 113 TMA, held, at , that:
“… an SA tax return would be an “other proceeding” as it is a “document required to be used in assessing…tax”
 Such an unequivocal finding which was, at least, tacitly approved by the Court of Appeal in R (Archer) v HMRC  1 WLR 5210 cannot, in my judgment, support Mr Ewart’s argument that s 114 TMA can only apply to HMRC or “official” documents rather than those of a taxpayer." (Applicants in the Post Prudential Closure Notice Applications Group Litigation v. HMRC  UKFTT 459 (TC), Judge Brooks)
Query whether s.114(1) applies to save taxpayer claims
s.114(1) can apply
" Had I not come to such a conclusion, I would have found that the claim could be validated in accordance with s 114 TMA." (Applicants in the Post Prudential Closure Notice Applications Group Litigation v. HMRC  UKFTT 459 (TC), Judge Brooks, re a claim for overpaid tax)
“In our view the claims have been made in the correct form. If necessary we would hold that this claim is an “other proceeding” in s 114(1) TMA so as to validate the claim for any want of form or omission.” (Dugan v. HMRC  UKFTT 618 (TC), §119).
s.114(1) cannot apply
" We accept Ms Shaw’s submission, that is supported by paragraph 34 of Lewison LJ’s judgment in Archer, that “other proceedings” for the purpose of s114 include “every document required to be used in assessing, charging, collecting and levying tax” for the purposes of s113(3) of TMA. However, that definition does not apply to the 5 Claim Letter. By the time of that letter, the process of assessing, charging, collecting and levying tax was complete and indeed the Claim Letter sought to establish that that process had resulted in the Appellants paying the wrong amount of tax. No doubt Ms Shaw is correct to say that the process of determining how much tax is due can be an iterative process. But Parliament has not specified that any document relevant to a 10 taxpayer’s final tax liability falls within s113(3). Rather, Parliament has singled out documents required to be used in assessing, charging, collecting and levying tax. That process ended well before the Claim Letter was written and, moreover, there was no “requirement” to submit the Claim Letter at all." (GLL BVK International Immobilien Spezialfonds v. HMRC  UKUT 17 (TCC), Judge Jonathan Richards and Judge Thomas Scott)
Defects in form of claim must be raised in closure notice
“But in any event we are of the view that HMRC cannot now argue that the claim is not “valid” as not being in the correct form, when they have enquired into the claim and issued a closure notice where neither the enquiry or the closure notice raised the issue of lack of compliance with the prescribed requirements.” (Dugan v. HMRC  UKFTT 618 (TC), §123).
Mistakes in assessments and determinations
"(2) An assessment or determination shall not be impeached or affected—
(a) by reason of a mistake therein as to—
(i) the name or surname of a person liable, or
(ii) the description of any profits or property, or
(iii) the amount of the tax charged, or
(b) by reason of any variance between the notice and the assessment or determination." (TMA 1970, s.114(2))
Fundamental variance between assessment and notice does not affect validity of assessment
" If the case were one where HMRC had to rely on section 114(1) to cure the defect in the Penalty Notices, I would agree with Mr Conolly that the mistake was of too fundamental a nature to fall within the scope of that subsection. It was indeed a gross error, and one that, viewed objectively, might have been misleading, because it could have led the recipient to believe that an earlier determination had been made by the Commissioners in or before April 2004, and that such earlier determination had either not been notified at all or the notification had gone astray. If the Penalty Notices were the documents which founded liability to the penalties, there would be much to be said for the view, echoing Slade LJ in Baylis v Gregory, that specifying the correct dates is something HMRC must get right. However, Baylis v Gregory, as I have already pointed out (see paragraph 30 above), was not a decision on section 114(2) at all, and the language of section 114(2)(b) is clear and unqualified. The force of the words "any variance" is that no variance of any description between the notice and the determination is to invalidate the determination. I accept that there may come a stage where the error or discrepancy in question is so fundamental in character that it could not properly be described as a "variance" at all; but in my judgment a mistake about dates of the type made in the present case gives rise to a "variance" within the ordinary and natural meaning of that word." (Pipe v. HMRC  EWHC 646 (Ch), Henderson J)
Automated actions validated
"(1) Anything capable of being done by an officer of Revenue and Customs by virtue of a function conferred by or under an enactment relating to taxation may be done by HMRC (whether by means involving the use of a computer or otherwise).
(2) Accordingly, it follows that HMRC may (among other things)—
(a) give a notice under section 8, 8A or 12AA of TMA 1970 (notice to file personal, trustee or partnership return);
(b) amend a return under section 9ZB of that Act (correction of personal or trustee return);
(c) make an assessment to tax in accordance with section 30A of that Act (assessing procedure);
(d) make a determination under section 100 of that Act (determination of penalties);
(e) give a notice under paragraph 3 of Schedule 18 to FA 1998 (notice to file company tax return);
(f) make a determination under paragraph 2 or 3 of Schedule 14 to FA 2003 (SDLT: determination of penalties).
(3) Anything done by HMRC in accordance with subsection (1) has the same effect as it would have if done by an officer of Revenue and Customs (or, where the function is conferred on an officer of a particular kind, an officer of that kind).
(4) In this section— "HMRC" means Her Majesty's Revenue and Customs; references to an officer of Revenue and Customs include an officer of a particular kind, such as an officer authorised for the purposes of an enactment." (FA 2020, s.103)
" We are far from persuaded that the decision in Assem Allam on the construction of s.103 was wrong. Mr Gordon said that it was obviously wrong and had failed to take into account s.103(4). However, the argument based on s.103(4) is recorded in  and answered in the paragraph that we have set out above. The effect of that decision and our own preferred construction of s.103 is that a notice issued by HMRC, whether by automated computer function or otherwise, is as valid as if issued by an officer of HMRC. It is therefore no longer necessary, as it was in Rogers and Shaw, for HMRC to adduce evidence that an officer of HMRC authorised the criteria for and the establishment and use of an automated computer to send notices to file or penalty assessments. What is required is for HMRC to prove that the notice was its notice. In most cases, that is likely to be accepted by the taxpayer and to be obvious on the face of the notice and, if not, will be corroborated by HMRC's records of a notice having been sent or an assessment or determination made and sent. That of course does not preclude a taxpayer from raising a case that the notice it has received is not a genuine HMRC notice, or that it was invalid for any other reason." (Marano v. HMRC  UKUT 113 (TCC), Fancourt J and Judge Tilakapala)
" We are satisfied that Parliament intended to validate all the notices referred to in s 103(2) where they are issued by HMRC as a department, including such notices issued using a computer. That is the ordinary and natural meaning of the words used in s 103(3).The reference to HMRC in this context is plainly to HMRC as a department. It is difficult to see what useful purpose Mr Ridgway’s narrow construction would serve. There has been no suggestion that individual Commissioners have exercised the functions of officers of HMRC in circumstances where there has been doubt as to their power to do so...
 If we were in any doubt about the effect of s 103, the Explanatory Note would resolve that doubt. The context in which it was enacted was to confirm HMRC’s administrative practices and to give certainty to taxpayers who receive a notice from HMRC that they should treat the notice as valid. It was not in the context of ensuring that individual Commissioners could perform actions required to be performed by officers." (Allam v. HMRC  UKUT 291 (TCC), Edwin Johnson J and Judge Cannan)
"(5) This section is treated as always having been in force.
(6) However, this section does not apply in relation to anything mentioned in subsection (1) done by HMRC if— (a) before 11 March 2020, a court or tribunal determined that the relevant act was of no effect because it was not done by an officer of Revenue and Customs (or an officer of a particular kind), and (b) at the beginning of 11 March 2020, the order of the court or tribunal giving effect to that determination had not been set aside or overturned on appeal." (FA 2020, s.103)
" Had the applicable law remained the same as it was when the FTT made its decision, we would for the reasons given respectfully have disagreed with the conclusions reached in the Decision on whether HMRC had proved that an officer or officers authorised the sending of the full return or the making and sending of the penalty assessments.
However, on 22 July 2020 s.103 of the Finance Act 2020 became law and it thereupon had full retrospective effect, subject to certain transitional provisions that do not apply in this case." (Marano v. HMRC  UKUT 113 (TCC), Fancourt J and Judge Tilakapala)
Retrospective amendment to accounts does not affect corporation tax position
"(6) If Shinelock had been given proper notice of this issue, it could have altered its accounts so as to recognise the payment.
We have concluded that Shinelock was on notice of this issue, but, more fundamentally, an amendment to its 2015 accounts could not have been made with retrospective effect for corporation tax purposes." (Shinelock Limited v. HMRC  UKUT 107 (TCC), Judge Thomas Scott and Judge Greenbank)