Henry Rafferty v The Commissioners for HMRC

Where a lower tribunal gives sparse reasons, an appellate tribunal must review its decision in the context of the material evidence and submissions. If the rationale is apparent and provides a valid basis for the result, the appeal should be dismissed.

A discovery assessment does not require new information. It is sufficient that an officer, acting honestly and reasonably, has newly concluded that an assessment is insufficient. Deliberate conduct requires conscious or intentional conduct concerning the inaccuracy, and can include a conscious choice not to ascertain the correct position where the taxpayer knew that this should be done.

The appellant challenged the First-tier Tribunal’s dismissal of his appeals against a closure notice, discovery assessments, tax penalties and an information-notice penalty. The assessments concerned alleged undeclared income over multiple tax years, and the penalties were imposed on the basis of deliberate behaviour.

Permission was granted on grounds alleging inadequate findings and reasons concerning the appellant’s household expenditure, discovery assessments, and deliberate conduct. The Upper Tribunal also considered, but declined permission for, a late point concerning alleged absence of cross-examination. The central question was whether the First-tier Tribunal had made errors of law despite expressing its reasons briefly.

1. Appeal dismissed. The First-tier Tribunal’s decision was capable of better expression, but disclosed no error of law.

2. Applying English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605, the Upper Tribunal reviewed the First-tier Tribunal’s reasons in the context of the material evidence, HMRC’s statement of case and its skeleton argument. The reasons for the findings were apparent and provided a valid basis for the decision.

3. On the household issue, the First-tier Tribunal had considered the appellant’s spreadsheet and supporting material, found the spreadsheet unreliable, and made a reasoned finding that there was one household. A finding of two households would in any event have worsened, rather than improved, the appellant’s financial position.

4. The First-tier Tribunal had accepted HMRC’s case that the conditions for discovery assessments under Taxes Management Act 1970 section 29 were met. It was permissible to read HMRC’s articulated statutory case into the First-tier Tribunal’s concise conclusion. New facts were not required for a discovery: an honest and reasonable officer may newly identify an insufficiency through a change of view, opinion or correction of an oversight.

5. The same approach showed that the First-tier Tribunal had applied the correct burden and test for deliberate conduct. Deliberate inaccuracy involves conscious and intentional conduct concerning the inaccuracy, and may include deliberately choosing not to ascertain the correct position when it was known that this should be done. The penalties and extended time limits therefore stood.

6. The error in the First-tier Tribunal’s account of why HMRC had sought a meeting was minor and peripheral. The late cross-examination point had not been properly raised in the applications for permission to appeal, and permission to advance it was declined.

• Upper Tribunal (Tax and Chancery Chamber): dismissed the appeal and upheld the First-tier Tribunal’s decision: [2025] UKUT 63 (TCC).
• First-tier Tribunal: dismissed the appellant’s appeals against the closure notice, discovery assessments, penalties and information-notice penalty in a decision released on 10 May 2022. No citation is stated in the judgment.