Christopher Rokos, R (on the application of) v The Commissioners for HMRC

For a statutory enquiry notice to be effective, HMRC must establish that written notification of the intention to enquire was given in time to the nominated partner, an authorised agent, or the individual partner concerned. The legislation does not prescribe a particular form, but notification must have sufficient certainty and communicate the intention to enquire. An authorised agent may receive the notice on behalf of the partners. Mere indirect knowledge is not itself statutory notification, although notification may be proved by factual inference. On the facts, notices sent to the partnerships’ authorised promoters were effective, so the consequential amendments were lawful.

The claimant sought judicial review of HMRC’s consequential amendments to his personal tax returns for 2005/06 and 2006/07. The amendments followed HMRC enquiries into the Trojan Film Partners and Invicta Film Partnership No.41, GP, and subsequent follower notices concerning film finance tax relief.

The claimant argued that the partnership enquiry notices were invalid because they were not given to the partner who made and delivered the relevant returns, as required by section 12AC of the Taxes Management Act 1970. HMRC relied on notification to the partnerships’ agents, indirect notification, and discretionary remedial principles.

1. Claim dismissed. The notices addressed to the claimant were not issued ultra vires. IMIL had actual authority to receive notification for Trojan, and ICL had actual authority to receive notification for Invicta41.
2. Section 12AC of the Taxes Management Act 1970 requires written notification, given within time, of HMRC’s intention to enquire. It does not prescribe a particular form. The statutory purpose is to ensure that the taxpayer knows of the enquiry and has an opportunity to put its case. The necessary notification may be given to the nominated partner, the individual partner, or an authorised agent.
3. The contractual arrangements, read in context, gave IMIL and ICL authority to deal with the partnerships’ tax affairs and to receive enquiry notices. The partnerships’ business was centred on tax arrangements requiring regular and detailed liaison with HMRC. The relevant agency agreements therefore extended to receipt of the notices.
4. The court found it more likely than not that the relevant covering letters were sent to and received by the agents. The letters were in writing and unequivocally notified the intention to enquire into the partnership returns. A particular form 64-8 was not required and was probably not part of the relevant contractual arrangements.
5. It was unnecessary to decide the indirect-notification and remedy points. The judge nevertheless considered that indirect knowledge alone would not constitute statutory notification, although written notification could be proved by inference. She also indicated that, in an appropriate case, the court might consider the consequence Parliament intended to attach to defective service or decline judicial-review relief where no substantive unfairness had resulted.