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And all the time they were making a complete mess of this big case they were sending blue frighteners and debt collectors to collect peanuts from small fry, introducing MTD for pensioners with £10k of rental income, and failing to put resources into answering the telephone quickly and competently. HMRC seems to delight in making ordinary people's lives miserable but they let the big fish swim free either by stitching up deals behind closed doors or failing to land them when they have the chance. I cannot put into polite words what I think of HMRC.
Totally agree with CY.
Most of the population regard HMRC as a tax haven for the wealthy! Who needs Monarco?
It appears Mr Hargreaves has been lucky at least twice in his life.
I wonder if you are a tax Inspector and don't put a protective assessment through if you get a P45, put in the tower of London or get a beheading dependin on what the monarch decides?
Well done to Aweb for covering this interesting story. (except for The Telegraph, I did not see it publicised - other than when I mentioned it on my "interesting case" blog: https://www.accountingweb.co.uk/any-answers/how-to-avoid-ps84m-tax-whils... )
HMRC are too timid when dealing with the rich and famous, but as others said very brave when dealing with someone who owes a few hundred pounds. They need to spend money on getting a team of the best people possible to deal with cases like this. There is no point dropping a file on an inspectors desk and hoping they can deal with it along with everything else. What are they frightened of? If they have a sound case they have nothing to lose. There is too much at stake £84m is a lot of lost revenue.
I would not seek to excuse any failing by HMRC but I do think the whole area of Discovery is a bit confused and that is not helped by the courts making up rules (like "staleness") that are nowhere in the legislation. You may say the HMRC Officer could have made an assessment earlier, but when? The tribunal decided it was 2004 without, it seems any real evidence to support that. Sure, the Officer said he suspected in 2004 that there may have been a problem. But is that enough? There are many (tribunals included it seems) who follow the view that "mere suspicion is not enough". That certainly applies when looking at whether the Officer is barred from acting on a discovery but what does it mean for making what we understand as a " protective" assessment?
I can certainly sympathise with anyone who forms the view (incorrect in my own opinion) that something more than mere suspicion is required BEFORE a discovery assessment can be made. The consequence is that the Officer waits till he has something more certain before assessing and the tribunal then decides that the discovery is "stale". A complete mess and another example of why judges should refrain from making it up and simply apply the law as written. Just a thought!
Don't worry. Due to the huge money at stake here HMRC are certain to appeal this and we will eventually see full submissions from HMRC in the CoA (and possibly the SC) on DA staleness. Then, if HMRC ultimately lose that argument, you can be 100% sure to see a change in the legislation that prevents this problem (from HMRC's point of view of course).
I feel it would be good if the case did go to the SC, whatever the outcome. At least then we would have a better idea of how the law should be applied (although they would possibly address only the question if staleness). The problem is that it will not happen for a long time yet and confusion will reign until then.
This is ridiculous. If he was resident at the time then the tax should be due. It shouldn’t matter about staleness, being out of time etc.
Totally appreciate rules are in place to protect everyone but the guy shouldn’t be able to get off on a technicality/the discovery rules should be thrown out the window if the tax was legally due at the time.
I and many others might agree with some of the sentiments expressed but as you say, the rules are there to protect everyone.
That said, the problem here is not so much the rules as the judge made bit that has been applied.
I don't immediately have access to the cases but as I recall, the subject of "staleness" derives from a misinterpretation of a case in which the courts were considering the meaning of the word "discovers". One judge had said that this included circumstances in which it "newly" appeared (to the inspector) that there was an assessable amount.
The later courts interpreted the word "newly" as implying a temporal restriction to the ability of HMRC officers make an assessment following the making of a discovery.
If you consider the word "newly" in the context of what was being considered (in the case from which it derives), I don't believe the judge intended to imply a temporal restriction of any kind (which of course is not in the legislation). Rather it would be better viewed as implying simply a different conclusion.
There is (and was) widespread agreement in the courts that the word discover had a very wide meaning and would include, for example, a case in which one simply had a change of opinion (on the same facts). So to imply a temporal restriction would be contrary to all that existing case law.
It would appear that the later courts were trying to give some safeguard to the individual.
What they overlooked is that the legislation already contained (and does contain) that safeguard.
Once one makes a discovery, the next question is whether one can act on it (generally speaking, can the inspector / officer make an assessment). The protection for the individual is in the legislation itself which specifies various conditions and which sets assessing time limits. It does not matter when one makes the discovery if it is then too late to make an assessment. Converseley, if the assessment is in time, it should not matter when the discovery was made.
As stated previously, it would be far better if judges stopped trying to make the law and concentrated their minds on correctly applying that which Parliament has seen fit to legislate.
Whether HMRC can take an appeal (and, dare I say) make the correct arguments, is another matter.