top of page

Income tax and CGT: HMRC determination

 

"(1)     This section applies where—

(a)     a notice has been given to any person under section 8 or 8A of this Act (the relevant section), and

(b)     the required return is not delivered on or before the filing date.

(1A)     An officer of the Board may make a determination of the following amounts, to the best of his information and belief, namely—

(a)     the amounts in which the person who should have made the return is chargeable to income tax and capital gains tax for the year of assessment; and

(b)     the amount which is payable by him by way of income tax for that year;

and subsection (1AA) of section 8 or, as the case may be, section 8A of this Act applies for the purposes of this subsection as it applies for the purposes of subsection (1) of that section.

(2)     Notice of any determination under this section shall be served on the person in respect of whom it is made and shall state the date on which it is issued." (TMA 1970, s.28C(1) - (2))

 

Time limit for determination: 3 years from filing date

 

"(5)     No determination under this section ... shall be made otherwise than—

(a)     before the end of the period of 3 years beginning with the filing date; or

(6)     In this section “the filing date” in respect of a return for a year of assessment (Year 1) means either—

(a)     31st January of Year 2, or

(b)     if the notice under section 8 or 8A was given after 31st October of Year 2, the last day of the period of three months beginning with the day on which the notice is given." (TMA 1970, s.28C(1) - (2))

Determination has effect as self-assessment unless and until superseded by taxpayer's own self-assessment

"(3)     Until such time (if any) as it is superseded by a self-assessment made under section 9 of this Act (whether by the taxpayer or an officer of the Board) on the basis of information contained in a return under the relevant section, a determination under this section shall have effect for the purposes of Parts VA, VI, IX and XI of this Act as if it were such a self-assessment." (TMA 1970, s.28C(3))

Time limit for superseding self-assessment: 12 months from date of determination

"(5)     ..no self-assessment superseding such a determination, shall be made otherwise than—

[...]

(b)     in the case of such a self-assessment, before the end of the period of twelve months beginning with the date of the determination." (TMA 1970, s.28C(5))

 

Recovery proceedings may be continued in respect of amount shown in superseding self-assessment

"(4)     Where—

(a)     proceedings have been commenced for the recovery of any tax charged by a determination under this section; and

(b)     before those proceedings are concluded, the determination is superseded by such a self-assessment as is mentioned in subsection (3) above,

those proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

 

(4A)     Where—

(a)     action is being taken under Part 1 of Schedule 8 to the Finance (No 2) Act 2015 (enforcement by deduction from accounts) for the recovery of an amount (“the original amount”) of tax charged by a determination under this section, and

(b)     before that action is concluded, the determination is superseded by such a self-assessment as is mentioned in subsection (3),

that action may be continued as if it were action for the purposes of the recovery of so much of the tax charged by the self-assessment as is due and payable, has not been paid and does not exceed the original amount." (TMA 1970, s.28C(4) - (4A))

Income tax and CGT: HMRC determination

Corporation tax determination

 

No return delivered

"(1)     If no return is delivered in response to a notice requiring a company tax return, an officer of Revenue and Customs may determine to the best of their information and belief the amount of tax payable by the company.

(2)     The power to make a determination under this paragraph becomes exercisable if no return is delivered on or before the following date—

(a)     if the filing date for any return required by the notice can be ascertained, that date;

(b)     if no such date can be ascertained, the later of—

(i)     18 months from the end of the period specified in the notice, or

(ii)     three months from the day on which the notice was served.

 

(3)     The accounting period or periods for which a determination may be made are—

(a)     if there is only one accounting period ending in or at the end of the period specified in the notice, that period;

(b)     if there is more than one accounting period ending in or at the end of the period specified in the notice, each of those periods;

(c)     if an officer of Revenue and Customs has insufficient information to identify the accounting periods of the company, such period or periods ending in or at the end of the period specified in the notice as they may determine.

 

(4)     Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued." (FA 1998, Sch 18, para 36(1) - (4))

 

Time limit

"(5)     No determination under this paragraph may be made more than 3 years after the day on which the power becomes exercisable." (FA 1998, Sch 18, para 36(5))

 

Determination ineffective if no obligation to submit breached

"(6)     If the company shows—

(a)     that there is no accounting period of the company ending in or at the end of the period specified in the notice, or

(b)     that it has delivered a return for the accounting period, or each accounting period, ending in or at the end of the period specified in the notice, or

(c)     that no return is yet due for any such period,

any determination under this paragraph is of no effect." (FA 1998, Sch 18, para 36(6))

Returns delivered do not cover all relevant accounting periods

"(1)     If a notice requiring a company tax return is served on a company and—

(a)     a return is delivered for an accounting period ending in or at the end of the period specified in the notice, but

(b)     there is another period so ending (the “outstanding period”) which appears to an officer of Revenue and Customs is or may be an accounting period,

an officer of Revenue and Customs may determine to the best of their information and belief the amount of corporation tax payable by the company for the outstanding period.

(2)     The power to make a determination under this paragraph becomes exercisable—

(a)     if the filing date for the outstanding period can be ascertained and no return is delivered on or before that date;

(b)     if no such date can be ascertained and no return for that period is delivered by the later of—

(i)     30 months from the end of the period specified in the notice, or

(ii)     three months from the day on which the notice was served.

(3)     Notice of a determination under this paragraph must be served on the company, stating the date on which the determination is issued." (FA 1998, Sch 18, para 37(1) - (3))

Time limit

"(4)     No determination under this paragraph may be made more than 3 years after the day on which the power first became exercisable." (FA 1998, Sch 18, para 37(4))

Determination ineffective if no obligation to submit breached
 

"(5)     If the company shows—

(a)     that the outstanding period is not an accounting period, or

(b)     that it has delivered a return for that period,

any determination under this paragraph is of no effect." (FA 1998, Sch 18, para 37(5))

Scope of power to determine

"(1)     The power to make a determination under paragraph 36 or 37 includes power to determine—

(a)     any of the amounts mentioned in paragraph 8(1) (calculation of amount of tax payable), and

(b)     any amount forming part of the calculation of any of those amounts.

(2)     Notice of a determination under either of those paragraphs may be accompanied by notice of any determination by an officer of Revenue and Customs relating to the dates on which amounts of tax become due and payable under section 59D or 59E of the Taxes Management Act 1970." (FA 1998, Sch 18, para 38)

Determination has effect as self-assessment

"(1)     A determination under paragraph 36 or 37 has effect for enforcement purposes as if it were a self-assessment by the company.

 

(2)     In sub-paragraph (1) “for enforcement purposes” means for the purposes of—

(a)     the following Parts of the Taxes Management Act 1970—

Part VA (payment),

Part VI (collection and recovery),

Part IX (interest on overdue tax), and

Part XI (miscellaneous and supplementary provisions);

(b)     the provisions of this Schedule imposing tax-related penalties; and

(c)     the provisions of the Corporation Tax Acts enabling unpaid tax assessed on a company to be assessed on other persons.

 

(3)     For those purposes the period for which the determination is made shall be treated as an accounting period of the company, even though—

(a)     in the case of a determination under paragraph 36, an officer of Revenue and Customs has insufficient information to determine the accounting periods of the company and exercise their power under sub-paragraph (3)(c) of that paragraph, or

(b)     in the case of a determination under paragraph 37, an officer of Revenue and Customs has insufficient information to determine whether the outstanding period is an accounting period." (FA 1998, Sch 18, para 39)

Until superseded by actual self-assessment

"(1)     If after a determination has been made under paragraph 36—

(a)     the company delivers a company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

(b)     the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination or, if there is more than one, the determination for the period which is, or most closely approximates to, the period for which the return is made.

(2)     If after a determination has been made under paragraph 37—

(a)     the company delivers a further company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

(b)     the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination." (FA 1998, Sch 18, para 40(1) - (2))

 

Time limit: 3 years from default or 1 year from determination

(3)     Sub-paragraphs (1) and (2) do not apply to a return made—

(a)     more than 3 years after the day on which the power to make the determination first became exercisable (see paragraph 36(2) or 37(2)), or

(b)     more than twelve months after the date of the determination,

whichever is the later. (FA 1998, Sch 18, para 40(3))

 

Continuation of enforcement proceedings begun before self-assessment

"(4)     Where—

(a)     proceedings have been begun for the recovery of any tax charged by a determination under paragraph 36 or 37, and

(b)     before the proceedings are concluded the determination is superseded by a self-assessment,

the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

 

(5)     Where—

(a)     action is being taken under Part 1 of Schedule 8 to the Finance (No 2) Act 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of any tax charged by a determination under paragraph 36 or 37, and

(b)     before that action is concluded, the determination is superseded by a self-assessment,

that action may be continued as if it were action for the purposes of the recovery of so much of the tax charged by the self-assessment as is due and payable, has not been paid and does not exceed the original amount." (FA 1998, Sch 18, para 40(4) - (5))

Corporation tax determination

No appeal against income tax, CGT, corporation tax determination 

 

"55. The above conclusion brings the focus back to s 28C(3) TMA 1970. Until superseded by a self-assessment made under s 9 TMA 1970, a determination has effect for the stated purposes as if it were a self-assessment. The parts of TMA 1970 referred to in s 28C(3) are payment of tax, collection and recovery, interest on overdue tax, and “miscellaneous and supplemental”. Other than the latter, these Parts are dealing with enforcement of liability to tax; “miscellaneous and supplemental” covers a range of mechanical matters, including the definition section, s 118 TMA 1970. An unchallenged determination enables HMRC to use the provisions for the purpose of enforcing the liability created by that determination.

[56] There appears to be nothing else in TMA 1970 or elsewhere to support the existence of a right of appeal against a determination. Further, and consistently with the effect of s 28C TMA 1970, s 50(6)-(11) TMA 1970 (which falls within Part V “Appeals and Other Proceedings”) refers in all cases to “self-assessment” or “assessment” and not to “determination”.

[57] At paragraphs 28 to 33 of its decision, the FTT considered the scheme of s 28C TMA 1970, and concluded that the procedure envisaged by s 28C required no right to appeal against the amounts in any determination. It then considered the question what remedy a taxpayer has if a determination was purportedly issued where the conditions for its issue were not fulfilled. I agree with the conclusions set out by the FTT in those paragraphs.

...

[72] The FTT did refer briefly in general terms to the remedies available to a taxpayer who is subjected to a demand for tax under what that taxpayer considers to be an invalid determination. At paragraph 32 of its decision, two courses were mentioned. The first was to contest the demand in the forum in which HMRC sought to enforce it, ie to seek to defend enforcement proceedings on the grounds of invalidity of the determinations. The second was to institute judicial review proceedings in the High Court for a declaration that each of the determinations was a nullity.

[73] I agree with the FTT’s comments. Whether or not there might be any other means of challenging determinations is not an appropriate question for me to 15 consider; such issues are well beyond the scope of the matters which can be raised in the context of the present appeal. " (Bartram v. HMRC [2012] UKUT 184 (TCC), Judge John Clark)

"[62] The determination was not in issue before the Tribunal. [The taxpayer] accepted that it could not be appealed, see Bartram v HMRC [2012] UKUT 184." (Marano v. HMRC [2020] UKFTT 199 (TC), Judge Redston)

"[21] We agree with the Respondent .The decision in Bartram is binding upon us and we are therefore obliged to strike out that part of Ms. Moore's appeal." (Moore v. HMRC [2019] UKFTT 527 (TC), Judge Malek)

No appeal against income tax, CGT, corporation tax determination 

Challenge determination that is a nullity in enforcement proceedings

 

"[29] But that does not deal with Mr Clarke’s concern.  He asks what remedy a taxpayer has if a determination is purportedly issued when the conditions for its issue are not fulfilled.

 [30] It seems to us  that a ‘determination’ so issued would be a nullity. It  could not be and is not a determination within section 28C.  As a result the provision of Parts VA (payment of tax), Part VI (collection and recovery of tax) Part IX (interest on overdue tax) and Part XI  could not apply to it: no tax would become payable by virtue of such a determination, no distraint would be legal, no interest could be due.

 [31] But what can a taxpayer do when the officers of HMRC seek to collect the tax they say  is due under an invalid determination.  How does he resist their predations? 

 [32] The answer, it seems to us, is the same as would be the case for any other illegal demand. He may contest the demand in the forum HMRC seek to enforce it. If necessary he might institute judicial review proceedings in the High Court for a declaration that the determination is a nullity.  He has a remedy.  That remedy may be more formal than making an appeal to this tribunal but it is a certain remedy." (Bartram v. HMRC [2011] UKFTT 471 (TC), Judge Hellier - UT agreed, see above)

Challenge determination that is a nullity in enforcement proceedings

SDLT: HMRC determination 

 

"(1) If in the case of a chargeable transaction no land transaction return is delivered by the filing date, the Inland Revenue may make a determination (a “Revenue determination”) to the best of their information and belief of the amount of tax chargeable in respect of the transaction.

(2) Notice of the determination must be served on the purchaser, stating the date on which it is issued.

(3) No Revenue determination may be made more than 4 years after the effective date of the transaction." (FA 2003, Sch 10, para 25)

To dispute determination T should either submit self-assessment or (in certain circumstances) appeal determination

 

"[31] Having considered the arguments, the legislation, and the case law, I agree with the decision of Judge Vos in the case of Mashoof that Schedule 10 FA 2003 does not provide any jurisdiction for the Tribunal to decide whether a determination has been validly made, issued and served. Judge Vos helpfully sets out a clear analysis of the history of the legislation in his decision such that I do not need to repeat that history here.

[32] I note, in particular, that the limited permissible grounds of appeal which do exist in resect of SDLT Revenue determinations were specifically introduced by Parliament a year after the original legislation was enacted. It is therefore clear that Parliament has specifically considered what should be permissible grounds of appeal in respect of Revenue determinations and has not included appeal rights in relation to procedural irregularity. I also note that there is no right of appeal at all against income tax Revenue determinations, which are based on similar legislation." (Ebrahim v. HMRC [2022] UKFTT 96 (TC), Judge Fairpo)

“In a case where HMRC become aware of a potential liability to SDLT, making a determination under para 25 Sch 10 will prompt a reaction from the party, ie the alleged purchaser, on whom it has been served. That party may simply accept the determination as correct and pay the tax determined to be due. If the party considers the determination to be incorrect, para 27 Sch 10 permits that party (within the time limits specified under para 27(2)) to submit a self-assessment of the SDLT due, and the self-assessment supersedes the determination. If necessary, HMRC can enquire into the self-assessment and a different liability can ultimately be assessed. Whichever course is taken, the result is that the correct liability to tax can be arrived at and paid…However, making a self-assessment may not always be appropriate. Looking at the circumstances listed in para 36(5A) Sch 10, making a self-assessment appears to be inappropriate in any of the events listed. If the purchase did not take place, the interest in the land has not been purchased, the contract has not been substantially performed, or the land transaction is not notifiable, there should be nothing to self-assess. There should be no reason for that party to be within the SDLT system…In my view, this is the reason for the limitation in para 36(5A) of the grounds on which an appeal lies under para 35(1)(e).” (Crest Nicholson (South East) Ltd v. HMRC [2017] UKFTT 136 (TC), §§105 – 107).
 

SDLT: HMRC determination 

- Limited right of appeal against SDLT determination 

 

"(1) An appeal may be brought against—

[...]

(e) a Revenue determination under paragraph 25 (determination of tax chargeable if no return delivered)." (FA 2003, Sch 10, para 35(1)(e))

"(5A) The only grounds on which an appeal lies under paragraph 35(1)(e) are that—

(a) the purchase to which the determination relates did not take place,

(b) the interest in the land to which the determination relates has not been purchased,

(c) the contract for the purchase of the interest to which the determination relates has not been substantially performed, or

(d) the land transaction is not notifiable (for example, because the land transaction is exempt from charge under Schedule 3)." (FA 2003, Sch 10, para 36(5A))

No challenge to quantum or best judgment

"[114] My conclusion is that, with the exception of the matters referred to in para 36(5A) Sch 10, there is no reason for any right of appeal against a determination made under para 25 Sch 10.

[115] On that basis, I agree with [HMRC's] submissions that it is not open to an appellant, on an appeal against a determination, to raise questions such as the quantum of the SDLT chargeable, or whether the determination was made to the best of HMRC's information and belief. The only basis on which such matters may be questioned is by providing a self-assessment of the tax considered to be due, and following the appropriate appeal route if the amount of tax (if any) cannot be agreed with HMRC.

[116] Thus I do not consider that the Tribunal has jurisdiction to consider arguments to the effect that an officer's determination is not to the best of his information and belief." (Crest Nicholson (Wainscott) v. HMRC [2017] UKFTT 135 (TC), Judge John Clark)

- Limited right of appeal against SDLT determination 

- Determination has effect as self-assessment

 

"(1)     A determination under paragraph 25 has effect for enforcement purposes as if were a self-assessment by the purchaser.

(2)     In sub-paragraph (1) “for enforcement purposes” means for the purposes of the following provisions of this Part of this Act—

(a)     the provisions of this Schedule providing for tax-related penalties;

(b)     section 87 (interest on unpaid tax);

(c)     section 91 and Schedule 12 (collection and recovery of unpaid tax etc).

(3)     Nothing in this paragraph affects any liability of the purchaser to a penalty for failure to deliver a return." (FA 2003, Sch 10, para 26)

- Determination has effect as self-assessment

- Determination superseded by actual self-assessment return within time limit

 

"(1)     If after a Revenue determination has been made the purchaser delivers a land transaction return in respect of the transaction, the self-assessment included in that return supersedes the determination." (FA 2003, Sch 10, para 27)

 

Time limit: 4 years of power to make determination or 12 months from determination

"(2)     Sub-paragraph (1) does not apply to a return delivered—

(a)     more than 4 years after the day on which the power to make the determination first became exercisable, or

(b)     more than twelve months after the date of the determination,

whichever is the later." (FA 2003, Sch 10, para 27)

 

Enforcement proceedings may continue in relation to self-assessment amount

(3)     Where—

(a)     proceedings have been begun for the recovery of any tax charged by a Revenue determination, and

(b)     before the proceedings are concluded the determination is superseded by a self-assessment,

the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

(4)     Where—

(a)     action is being taken under Part 1 of Schedule 8 to the Finance (No 2) Act 2015 (enforcement of deduction from accounts) for the recovery of an amount (“the original amount”) of tax charged by a Revenue determination, and

(b)     before that action is concluded, the determination is superseded by a self-assessment,

that action may be continued as if it were action for the purposes of the recovery of so much of the tax charged by the self-assessment as is due and payable, has not yet been paid and does not exceed the original amount." (FA 2003, Sch 10, para 27)

- Determination superseded by actual self-assessment return within time limit
bottom of page