The Commissioners for HMRC v Bashir Ahmed Jafari

A discovery for the purposes of Taxes Management Act 1970 s29 does not become invalid through the mere passage of time. A tribunal must give effect to a party’s complete withdrawal of its case under the applicable procedural rules. It should not determine issues which the withdrawal has removed from dispute.

On an appeal for error of law, the Upper Tribunal may set aside and remake the decision. Where the appellant before the First-tier Tribunal withdrew all evidence and submissions, and the circumstances show a withdrawal of the whole case, the proper remade decision is to dismiss all of that party’s appeals.

HMRC appealed against a First-tier Tribunal decision released on 13 November 2019. The First-tier Tribunal had dismissed Mr Jafari’s appeals concerning most income-tax decisions, but allowed his appeal against a discovery assessment for 2009–10. It held that HMRC’s discovery had become stale before the assessment was made.

After the Supreme Court’s decision in Revenue & Customs Commissioners v Tooth [2021] UKSC 17, HMRC contended that staleness could not invalidate a qualifying discovery. Mr Jafari was debarred from defending the appeal after failing to provide grounds. The central further issue was whether, at the First-tier Tribunal hearing, he had withdrawn the entirety of his appeals or merely put HMRC to proof.

1. Appeal allowed. The First-tier Tribunal erred in law by treating the discovery underlying the 2009–10 assessment as stale. The Supreme Court’s reasoning in Revenue & Customs Commissioners v Tooth [2021] UKSC 17 established that a discovery which qualifies under Taxes Management Act 1970 s29 cannot cease to qualify merely because time passes.

2. The error was material because it was the basis on which the First-tier Tribunal had allowed the appeal against the discovery assessment. Under s12 of the Tribunals, Courts and Enforcement Act 2007, the Upper Tribunal therefore set aside the decision.

3. The Upper Tribunal remade the decision rather than remitting it. The language recorded by the First-tier Tribunal—that Mr Jafari offered no case and withdrew his evidence and submissions, with the tribunal’s agreement—was properly construed as a withdrawal of the entirety of his case under Rule 17 of the FTT Rules. Evidence and submissions together comprised his whole case. The First-tier Tribunal should have treated the appeals as withdrawn and should not have decided the discovery-assessment issue.

4. Accordingly, the decision was remade so that all appeals against the HMRC decisions addressed by the First-tier Tribunal were dismissed.

5. Alternatively and obiter, if there had been no complete withdrawal, Mr Jafari had submitted a 2009–10 return. HMRC would then have needed to satisfy s29(4) or s29(5). The unchallenged evidence made out deliberate conduct within s29(4), and either that conduct or failure to notify would have engaged the extended time limit in s36(1A).

• Upper Tribunal (Tax and Chancery Chamber): HMRC’s appeal was allowed. The First-tier Tribunal decision was set aside and remade: all appeals against HMRC’s decisions were dismissed.
• First-tier Tribunal (Tax Chamber): Decision released on 13 November 2019. It dismissed most of Mr Jafari’s appeals but allowed his appeal against the 2009–10 discovery assessment on the basis of staleness.