Upper Tribunal upholds closure notices

The taxpayers – who were three brothers (one of whom died before the Upper Tribunal hearing took place) – had applied to the First-tier Tribunal for closure notices in relation to HMRC enquiries into their self-assessment tax returns for various years going back to 2014.

HMRC claimed they were liable to tax under the transfers of assets abroad (ToAA) legislation on offshore income including a substantial dividend. The taxpayers disputed this. They said they had received substantial gifts from their late parents and that HMRC had adequate information to issue closure notices.

The First-tier Tribunal allowed the application and directed that HMRC issue closure notices. HMRC appealed saying the First-tier Tribunal had failed to ‘apply the relevant legal principles in determining the closure notice applications’.

The Upper Tribunal considered the First-tier Tribunal had correctly applied the relevant principles outlined in Beneficial House (TC6207) in deciding whether HMRC had reasonable grounds...