Tax update - March 2019

In this month’s update we report on (1) clarification from HMRC on time limits for discovery assessments into tax returns where the loss of tax is due to avoidance; (2) HMRC’s updated guidance for settling disguised remuneration schemes; and (3) confirmation in Spotlight 48 that taxpayers who have taken out disguised remuneration loans do not need to obtain a deed of release or exclusion of the loan from the lender before HMRC will agree a settlement.

We also comment on three recent decisions relating to (1) information notices issued by HMRC under Schedule 36, Finance Act 2008; (2) revocation of a taxpayer’s fixed protection pensions certificate; and (3) whether a law firm is a relevant data holder for the purpose HMRC’s data gathering powers.

News items

Time limits for discovery assessments into tax returns clarified
HMRC has clarified the rules on time limits for making a discovery assessment into a tax return where the loss of tax is due to avoidance. Read more.

Disguised remuneration: settling your tax affairs – HMRC extends payment period
On 1 and 4 February 2019, HMRC published amendments to its guidance on settling disguised remuneration loan tax liabilities before the April 2019 loan charge arises. Read more.

HMRC publishes Spotlight 48 and policy paper
On 14 February 2019, HMRC published Spotlight 48 and updated its policy paper on disguised remuneration and the loan charge. Read more.

Case reports

Hegarty – HMRC’s information notices were invalid
In Hegarty v HMRC [2018] UKFTT 0774 (TC), the First-tier Tribunal (FTT) has held that HMRC issued invalid information notices under paragraph 1, Schedule 36, Finance Act 2008 (FA 2008), as it had not provided suffcient evidence to support its suspicion that the taxpayers had paid insuffcient tax. Read more.

Hymanson – HMRC’s decision to revoke the taxpayer’s fixed protection was unreasonable
In Gary Hymanson v HMRC [2018] UKFTT 667, the FTT has held that HMRC’s decision to revoke the taxpayer’s fixed protection was unreasonable and directed that it be reinstated. In so finding, the FTT applied the equitable maxim "that which should be done should be treated as having been done". Read more.

Wilsons – HMRC unable to obtain law firm’s records
In Wilsons Solicitors LLP v HMRC [2018] UKFTT 627 (TC), the FTT has held that the obligation to keep records under the Money Laundering Regulations 2007 (MLR) does not make a law firm a relevant data-holder for the purpose of HMRC’s data-gathering powers. Read more.