No Return or Enquiry!

Mark McLaughlin looks at a recent attempt by HMRC to enquire into a ‘voluntary’ tax return

TAXPAYERS AND THEIR ADVISERS are potentially faced with numerous tax compliance obligations. HMRC will steadfastly seek to ensure that the taxpayer meets those obligations in strict accordance with the tax legislation.

However, it should not be overlooked that HMRC must also act in accordance with the tax statute. Taxpayers might be forgiven for automatically assuming that HMRC complies with the tax law and may therefore fail to spot instances where HMRC has not satisfied its own statutory obligations or has exceeded its powers. Fortunately, the tribunal (and the courts) will not hesitate to point out the error of HMRC’s ways as appropriate.

Valid enquiry?

For example, tax return enquiries are an area where HMRC’s actions might be erroneous or beyond its statutory powers in the specific circumstances of a case. The tribunal recently identified one such instance in Patel & Anor v Revenue and Customs [2018] UKFTT 185 (TC), involving an enquiry into an unsolicited tax return.

In that case, the taxpayers submitted unsolicited (‘voluntary’) paper tax returns to HMRC for 2008/09 in January 2010. HMRC wrote to the taxpayers stating that the returns would be treated for all purposes as though they had been sent in response to notices to file the returns. In October 2010, HMRC sent notices to the taxpayers purporting to be tax return enquiry notices (under TMA 1970, s 9A). The taxpayers subsequently applied to the First-tier Tribunal (pursuant to TMA 1970, s 28A(4)) for directions requiring HMRC to issue closure notices. In March 2016, closure notices were issued. The taxpayers appealed.

The tribunal had to consider (as a preliminary issue) whether the voluntary tax returns should be regarded as returns made under TMA 1970, s 8 for the relevant purposes of TMA 1970. An important issue for the tribunal concerned the meaning of the phrase ‘a return under section 8 [TMA 1970]’. The phrase was significant because section 9A permitted HMRC to enquire into ‘a return under section 8’. If the returns were not returns ‘under section 8’ HMRC could not open an enquiry under section 9A. If there was no enquiry under section 9A, HMRC could not issue a closure notice under section 28A because of section 28A(1): ‘An enquiry under section 9A(1) of this Act is completed when an officer of the Board by notice (a “closure notice”) informs the taxpayer that he has completed his enquiries and states his conclusions.’ Thus, if there was no valid enquiry under section 9A, there could be no valid closure notice under section 28A.

Voluntary returns

The tribunal held that the voluntary returns made by the taxpayers were not returns made under section 8(1), with the result that an enquiry could not be opened under section 9A. The tribunal considered that the meaning of the words used by Parliament was so clear that it could not be changed by reliance on a purposive interpretation. The legislation’s purpose was made manifest by its language; a return under No return or enquiry! 5 TMA 1970, s 8 was only made where a return was filed in pursuance of an obligation to do so created by a notice given to the taxpayer under section 8(1). Furthermore, the tribunal rejected HMRC’s argument that its collection and management powers (under TMA 1970, s 1 and CRCA 2005, s 5) authorised HMRC to treat the returns as made under TMA 1970, s 8. The tribunal also disagreed with HMRC that CRCA 2005, s 9 (which gives HMRC ancillary powers to do anything considered necessary, expedient, incidental or conducive to its functions) conferred on HMRC such sweeping powers as to treat a voluntary return as a return under section 8 and as ‘clothing’ HMRC’s practice in respect of voluntary returns with the force of law. The preliminary issue was therefore decided in the taxpayers’ favour.

Different route?

Interestingly, the tribunal pointed out that whilst the voluntary returns submitted by the taxpayers in Patel & Anor were not returns made under TMA 1970, s 8, they could be characterised as a notice of liability to tax pursuant to section 7, potentially opening the way for HMRC, on receipt of a voluntary return to issue a notice under section 8(1) requiring the taxpayer to make a return (i.e. effectively a resubmission of the voluntary return), subject to statutory time limits. HMRC might alternatively consider making a discovery assessment (under TMA 1970, s 29) if the conditions for a valid assessment were satisfied, although importantly not for the purposes of making speculative enquiries into the return.


In general, carefully checking HMRC’s procedures and actions to ensure compliance with the tax legislation is a necessary and vital duty for the professional adviser.

• Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP is a tax consultant to professional firms (tax@ and mark., Managing Editor of TaxationWeb (www. and Editor of McLaughlin’s Tax Case Review ( html).


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