Tax return immune from enquiry

Tax return sent to wrong address cost HMRC thousands

A 2008/09 self-assessment tax return that was sent to a wrong address led to HMRC missing out on £16.5K in income tax following a recent First Tier Tax Tribunal ruling.

Alex Revell, a professional footballer, had been in correspondence with HMRC over a number of years regarding alleged arrears of tax covering five years ended 5th April 2012. As he was playing in the lower divisions during these years his earnings were relatively modest compared with the riches of the Premier League and all his tax was accounted for via the PAYE system. Until 2012 he had never been asked to complete a tax return.

In March 2011 HMRC identified an underpayment of tax on Mr Revell’s PAYE record and sent notification of this to an historic address of Mr Revell’s in Newhaven, when he was actually living in Brentwood, so he never received it. This despite the fact that HMRC were aware of the Brentwood address in July 2010 from a P45 issued by Wycombe Wanderers.

Having not heard from Mr Revell, in September 2012 HMRC issued a 2008/2009 self-assessment tax return to the Brentwood address. However, by that time Mr Revell was not living there either but a P60 for the year ended 5th April 2012, issued by Rotherham United, showed his correct address and the Revenue should have updated their records accordingly.

Further correspondence was sent to the Brentwood address by HMRC relating to penalties prompting Revell’s agent to contact HMRC in early October 2012 and notify the department of the correct address in Doncaster.

A duplicate tax return was sent to Mr Revell in October 2012 devoid of date of issue, name or address.

Realising that the normal four year time limit to issue another tax return filing notice had run out, HMRC issued a determination of the tax due in February 2014, which was received by the agent. It was contended that the determination was not valid as no request to file a self assessment tax return was ever properly made. Nevertheless, Mr Revell submitted a 2008/2009 return in March 2014, as this was the only way to displace the determination but it was made clear to HMRC that this was done under protest and that Revell felt coerced into doing so because he was being pursued for the outstanding tax claimed by HMRC. That return showed no tax due.

HMRC then purported to open an enquiry into this return and subsequently issued a closure notice amending the return to show £16.5K tax due. Revell appealed on the basis that it was not possible for HMRC to open an enquiry because no valid notice to file a tax return had been made and consequently this also invalidated the closure notice. HMRC contended that the tax return should be regarded as an unsolicited return thereby treating it as a response to a notice to make a return by the date HMRC received it. The Tribunal rejected HMRC’s view as there was no legal basis for it and that the original tax return was not served in compliance with tax legislation as it had been sent to an address that was no longer the taxpayer’s ‘usual or last known place of residence’ because HMRC had been notified of a more current address via Revell’s form P60 for the year ended 5th April 2012.