Tinkler v Revenue & Customs

A notice of enquiry under section 9A of the Taxes Management Act 1970 must be given in accordance with the authority actually conferred on a taxpayer’s agent. Form 64-8, read with HMRC’s incorporated guidance, authorised correspondence about an enquiry but reserved the formal notice for the taxpayer. It therefore gave no apparent authority to receive that notice. The engagement letter conferred no wider actual authority. A copy sent to the agent for information did not become a notice, particularly where HMRC had not relied on the agent’s supposed authority. Estoppel by convention requires manifested assent to a shared assumption, responsibility for that assumption, reliance, subsequent mutual dealing, and sufficient detriment or benefit to make departure unconscionable. HMRC’s own misrepresentation, without endorsement by the agent, did not satisfy those requirements.

HMRC purported to open an enquiry into the taxpayer’s 2003/04 self-assessment return under section 9A of the Taxes Management Act 1970. It sent the notice to an address where he no longer lived and sent a copy to his accountants, BDO. The First-tier Tribunal found that BDO lacked actual and apparent authority but held that the taxpayer was estopped by convention from denying the enquiry. The Upper Tribunal held that BDO was duly authorised to receive the notice and rejected the estoppel argument. The taxpayer appealed, and HMRC cross-appealed on estoppel. The central issues were whether the copy sent to BDO was valid notice and, if not, whether estoppel prevented the taxpayer from relying on the defect.

1. Disposition. The taxpayer’s appeal was allowed and HMRC’s cross-appeal was dismissed. No valid enquiry had been opened.
2. Authority to receive notice. Form 64-8 had to be read as a whole, including the HMRC website material incorporated by reference. Although its general wording covered correspondence and forms, the specific guidance stated that a formal notice of enquiry had to be given to the taxpayer, while correspondence could be addressed to an authorised agent. This was a clear limitation on BDO’s apparent authority. The engagement letter, particularly its paragraph dealing with formal notices, conferred matching actual authority and no wider authority. The general clause concerning communications about the return did not override that specific limitation.
3. Effect of the copy notice. HMRC had not relied on BDO having authority to receive the formal notice. The notice was sent to the taxpayer, while BDO received only an informational copy. Since the taxpayer never received the notice and BDO lacked actual and apparent authority, the statutory requirements were not met.
4. Estoppel by convention. The court applied the principles summarised in HMRC v Benchdollar Limited and Ors [2009] EWHC 1310 (Ch), as qualified and approved in Blindley Heath Investments Ltd & Anor v Bass [2015] EWCA Civ 1023. BDO had assumed that HMRC’s representation was correct, but had not endorsed it, assumed responsibility for it, or conveyed that HMRC should rely on it. Mere acquiescence did not satisfy the responsibility requirement. Unconscionability also failed. HMRC had caused the mistake through its own misrepresentation and error, while BDO had done nothing to cause adoption of the assumption. The court therefore upheld the Upper Tribunal’s rejection of estoppel. It was unnecessary to decide whether the statutory protection could be varied by agreement; the observation concerning Keen and Anor v Holland [1984] 1 WLR 251 was obiter.

1. Court of Appeal (Civil Division) — Allowed the taxpayer’s appeal and dismissed HMRC’s cross-appeal.
2. Upper Tribunal (Tax and Chancery Chamber) — Held that BDO had authority to receive the notice and rejected the estoppel argument.
3. First-tier Tribunal — Found that BDO lacked actual and apparent authority but held that estoppel by convention prevented the taxpayer from denying that a valid enquiry had been opened.