[2010] UKFTT 484 (TC)

TC00744

Appeal number: TC/2010/04252

Notice issued pursuant to Finance Act 2008 Sch 36 para 1—Whether notice invalid on ground that notice of intention to enquire into the partnership return not given within the time allowed in Taxes Management Act 1970 s.12AC(2)—Appeal dismissed

FIRST-TIER TRIBUNAL

TAX 

	THE SANDROCK HOTEL (PARTNERSHIP)	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

TRIBUNAL:	Dr Christopher Staker (JUDGE)							MRS C E FARQUHARSON (MEMBER)

Sitting in public in Colchester on 24 August 2010

Mrs JA Linney and Mr PK Smith, partners of the Sandrock Hotel (partnership) for the Appellant

Mr H O’Leary, HMRC Presenting Officer, for the Respondents

© CROWN COPYRIGHT 2010

DECISION
Introduction
1.	The Appellant in this appeal is the Sandrock Hotel partnership.  The partners in that partnership are Mrs JA Linney and Mr PK Smith.  The appeal is against a notice dated 4 February 2010 requesting documents and information issued by HMRC pursuant to paragraph 1, Schedule 36, of the Finance Act 2008 (the “Schedule 36 Notice”).
2.	The Schedule 36 Notice was issued by HMRC in the course of an enquiry into the Appellant’s self-assessment income tax return for the year ended 5 April 2008.  The Appellant’s case is that the Schedule 36 Notice was not validly issued because there was no valid enquiry into the Appellant’s 2007/08 self-assessment.  This in turn is said to be because the enquiry was not commenced within the time-limit prescribed by s.112AC of the Taxes Management Act 1970 (the “TMA”).  The Appellant’s case is that the enquiry was not commenced until 4 November 2009, when in fact the time limit for commencement of the enquiry by HMRC was 3 November 2009.  HMRC’s case is that the enquiry was commenced on 3 November 2009.
3.	The issue in dispute between the parties is in fact a very narrow one.  Both parties proceeded in this appeal on the basis that the appeal would succeed if the enquiry was commenced on 4 November 2009 rather than 3 November 2009.  The Tribunal has therefore proceeded to decide the appeal on that basis without undertaking a more detailed analysis of the route to that conclusion.
Relevant legislation
4.	Paragraph 1, Schedule 36, of the Finance Act 2008 states as follows:
(1)	An officer of Revenue and Customs may by notice in writing require a person (“the taxpayer”)— 
(a)	to provide information, or
(b)	to produce a document, 
if the information or document is reasonably required by the officer for the purpose of checking the taxpayer's tax position. 
(2)	In this Schedule, “taxpayer notice” means a notice under this paragraph. 
5.	Section 12AC of the TMA provides as follows:
(1)	An officer of the Board may enquire into a partnership return if he gives notice of his intention to do so (“notice of enquiry”)— 
(a)	to the partner who made and delivered the return, or his successor, 
(b)	within the time allowed. 
(2)	The time allowed is—
(a)	if the return was delivered on or before the filing date, up to the end of the period of twelve months [after the day on which the return was delivered]; 
(b)	if the return was delivered after the filing date, up to and including the quarter day next following the first anniversary of the day on which the return was delivered; 
(c)	if the return is amended under section 12ABA of this Act, up to and including the quarter day next following the first anniversary of the day on which the amendment was made. 
For this purpose the quarter days are 31st January, 30th April, 31st July and 31st October. 
6.	Section 115 of the Taxes Management Act 1970 provides as follows:
(1)	A notice or form which is to be served under the Taxes Acts on a person may be either delivered to him or left at his usual or last known place of residence. 
(2)	Any notice or other document to be given, sent, served or delivered under the Taxes Acts may be served by post, and, if to be given, sent, served or delivered to or on any person [by HMRC] may be so served addressed to that person—
(a)	at his usual or last known place of residence, or his place of business or employment, or
(b)	in the case of a company, at any other prescribed place and, in the case of a liquidator of a company, at his address for the purposes of the liquidation or any other prescribed place. 
(3)	In subsection (2) above “prescribed” means prescribed by regulations made by the Board, and the power of making regulations for the purposes of that subsection shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons. 
The evidence and arguments of the parties
7.	There was no dispute between the parties that the notice of enquiry under s.12AC of the TMA was delivered to the correct address for the Appellant in Clacton on Sea.  For the Appellant it is admitted that it was found on the floor of the hallway on 4 November 2009.  The HMRC position is that the letter was hand delivered by being pushed through the letter slot on the door of the hotel by an HMRC official on 3 November 2009.  The Appellant’s position is that it was found behind the door only on 4 November 2009, the suggestion being that it would have been found earlier if it had been delivered the previous day.
8.	The HMRC position is that the enquiry notice was hand delivered on the morning of 3 November 2009 by an HMRC officer who had driven in an official car from Colchester to Clacton on Sea expressly for that purpose.  It is said that HMRC records show that this car journey commenced at 09:45 and that the officer returned to Colchester by 11:10.  It is further said that a file note on the HMRC computer system states that the officer had hand delivered the notice to the address in Clacton on Sea on that day.  It is said that the HMRC computer system indicates that this file note was created on 3 November 2009 at 11:13 and was last modified on the same day at 11:43.  The HMRC position is that such hand delivery is a valid means of service under s.115(2) of the TMA.  It is argued by HMRC that no issue has been taken by the Appellant as to the content of the enquiry notice, and that the only issue is the date of the delivery.  
9.	As evidence of the HMRC position, HMRC has submitted amongst other evidence a witness statement of the HMRC officer in question dated 17 August 2010, copies of the log for the vehicle that was used for the journey, and a printout of the filenote referred to and a screenshot showing when that file was created and last modified.  The evidence of HMRC is very clear about when the enquiry notice was delivered, including not only the day of delivery, but the time of day, and the person who delivered the notice, and the means by which the delivery was effected.  The Tribunal finds the various items of HMRC evidence to be all materially consistent.  At the hearing, it was not disputed by those appearing for the Appellant that the times given for the start and end of the journey were consistent with how long it would take to drive from Colchester to Clacton on Sea and back.  The witness statement and the vehicle log were consistent in the timings given for this journey.  The evidence shows that the filenote was created shortly after the journey is said to have been completed.  It was explained in the HMRC evidence that the reason why the enquiry notice was hand delivered by a special car journey rather than posted was that HMRC realised that 3 November 2009 was the last date on which the notice could be given, and that mail strikes at the time made the mail unreliable.
10.	The evidence for the Appellant was less precise.  The evidence of Mrs Linney and Mr Smith is that the letter was found behind the door on 4 November 2009, having apparently been pushed through the letter slot.  Their evidence suggests that if the letter had been hand delivered the previous day, it would have been noticed.  They also refer to what they say are certain contradictions and inconsistencies in the HMRC evidence.  They point to the fact that, for instance, the car log does not itself indicate the purpose of the journey to Clacton on Sea.  They suggest that it is unlikely that a special journey would have been made by car merely to hand deliver the enquiry notice, when it could have been sent by post.  They state that the postal strikes at the time were not such as to prevent the letter being delivered on time by post.  They suggest that the letter would not be dated 3 November 2009 if it had in fact been typed the previous day as the HMRC evidence claims.  They suggest that HMRC would not have waited until so near the deadline before issuing the enquiry notice if they were working diligently.  It was suggested that it was not impossible that HMRC might falsify evidence in order to show that the letter was delivered on 3 November 2009, even though it was only delivered on 4 November 2009.
11.	The Tribunal has considered all of the evidence in this case as a whole, in the round.  The Tribunal must determine the date of delivery on the basis of the evidence, and on the basis that the burden of proof is on HMRC to show delivery on 3 November 2009 on a balance of probabilities.  A finding in favour of one party on a balance of probabilities does not mean that the other party is being untruthful.  It merely means that the case of one party is more likely to be the truth than that of the other.
12.	The Tribunal finds the evidence of HMRC to be clear and precise.  Although the car log for instance does not in itself show the purpose of the journey in question, this is clearly and precisely stated in the witness statement of the officer in question.  The car log itself did not require or provide space to disclose the purpose of the journey.  The Tribunal finds the HMRC evidence to be materially consistent.  Notwithstanding the improbabilities and contradictions suggested by the Appellant, the Tribunal does not find these sufficient to cast any serious doubt on the HMRC evidence.  
13.	The Tribunal finds on a balance of probabilities that the enquiry notice was delivered on 3 November 2009.  The Tribunal finds that the method of delivery was a valid form of service under s.115 of the TMA.  The Appellant has not taken issue with content of the enquiry notice.  Given the way that the appeal was presented by both parties, referred to in paragraphs 2-3 above, the Tribunal finds that the appeal must be dismissed.
14.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

TRIBUNAL JUDGE
RELEASE DATE: 16 September 2010