William Tinkler v The Commissioners for HMRC

A notice of enquiry under section 9A of the Taxes Management Act 1970 may validly be given to a taxpayer through an agent with actual or apparent authority to receive it. A broad authority to act in all matters within HMRC’s responsibility includes receiving such a notice unless clearly excluded. A copy sent to the authorised agent for information can therefore constitute effective notification.

Conversely, actual knowledge of an enquiry, or later forwarding of a notice that was not properly addressed, does not cure defective statutory notification. Estoppel by convention cannot deprive a taxpayer of the statutory notice and time-limit protections in section 9A.

HMRC issued a closure notice reducing to nil a loss claimed by William Tinkler in his 2003–04 return. He appealed to the First-tier Tribunal and was permitted to contend that HMRC had not validly opened the underlying enquiry.

The FTT held that the enquiry letter was not sent to Mr Tinkler’s usual or last known residence and that his accountants, BDO, lacked authority to receive it. It nevertheless decided for HMRC because Mr Tinkler had actual knowledge of the enquiry and, alternatively, was estopped from denying its validity: [2016] UKFTT 170 (TC).

HMRC cross-appealed through a Respondents’ Notice. The central issue was whether the copy notice received by BDO constituted valid notice to Mr Tinkler under section 9A of the Taxes Management Act 1970.

1. HMRC’s cross-appeal was allowed and Mr Tinkler’s appeal was dismissed. BDO had both apparent and actual authority to receive the enquiry notice. Form 64-8 authorised BDO in the widest terms to act for Mr Tinkler in matters within HMRC’s responsibility. Apparent authority depends on the principal’s representation to the third party. Statements on HMRC’s website about its own practice did not narrow Mr Tinkler’s representation or clearly exclude authority to receive an enquiry notice.

2. There was nothing in section 9A of the Taxes Management Act 1970 that displaced ordinary agency principles or required express authority for this particular notice. A notification received by an agent within the scope of actual or apparent authority is notification to the principal. The copy sent to BDO was effective even though the covering letter described it as being for BDO’s information. The statutory purpose was to inform the taxpayer, which was achieved through the authorised agent.

3. The Tribunal rejected the FTT’s separate conclusion that actual knowledge of the enquiry could itself amount to valid notice. Section 9A requires notice to the taxpayer or a properly authorised agent. Under section 115(2) of the Taxes Management Act 1970 and section 7 of the Interpretation Act 1978, a notice not properly addressed is not validated merely because it is forwarded or learned of from another source.

4. The Tribunal’s conclusions on estoppel by convention were obiter. It held that estoppel cannot override the statutory protections afforded by section 9A. In any event, BDO’s communications did not clearly convey an assumption of validity for HMRC to rely on, and reliance on the statutory protection was not unconscionable.

5. The case was remitted to the FTT for determination of the substantive tax appeal.

• Upper Tribunal (Tax and Chancery Chamber): HMRC’s cross-appeal was allowed and William Tinkler’s appeal was dismissed. The case was remitted for the substantive appeal.

• First-tier Tribunal (Tax Chamber): The FTT determined the preliminary validity issue in HMRC’s favour, but held that BDO lacked actual and apparent authority to receive the notice: [2016] UKFTT 170 (TC).