Archer, R v HM Revenue and Customs

As is often the case in the law, it is necessary to select the correct starting-point. Should it be the submission of Ms Nathan that I must decline jurisdiction, or should I begin with Mr Goldberg’s submission that the Closure Notices did not amend the tax returns (and, connectedly, the self-assessments included within the returns), such being a condition precedent to the crystallisation of the statutory debt under section 59B(5)? Autologic Holdings Plc v IRC [2006] 1 AC 118 is authority for the proposition that assessments must be appealed to the F-tT, and that it is an abuse of process to litigate by ordinary action. However, Autologic predicates an assessment, and Mr Goldberg’s core submission is that there has been none. Ms Nathan’s riposte is that the Closure Notices contained amendments to the return, or at the very least purported amendments, in which circumstances section 31 of the TMA applies – either alone or in conjunction with section 114. To my mind, if Ms Nathan were right, not merely would she be so on one or other of the substantive points, but she would also be so on the abuse of process point. However, it is not obvious to me that she is right; and in my judgment her submission cannot be taken as a preliminary issue. It seems to me that I must begin by examining Mr Goldberg’s submissions on section 28A to see where they lead.

Mr Goldberg’s case is simple and straightforward, and it was very neatly presented. The Closure Notices must make the amendments to the returns. It is true that section 28A(2) does not state in terms that a Closure Notice must itself set out the amount of tax said to be due, but Mr Goldberg’s submission was that this is implicit in the overall statutory scheme, as well as being consonant with the policies and objects of the TMA. On Mr Goldberg’s argument, a Closure Notice is the formal document which amends the return, as well as the self-assessment included within the return. The appeal under section 31 is against what the Closure Notice contains, including the amendments to the return, being in the nature of assessments. HMRC’s alteration of the return and the self-assessment online is consequential or adjectival, no more (and no less) than the implementation of the amendments made in the Closure Notice (without for one moment accepting Mr Goldberg’s submissions, Ms Nathan did use the noun “implementation” in this context during the course of her oral argument). Thus, a distinction must be drawn between what a closure notice does (or must do), and the administrative steps taken by HMRC to give effect to it.

In my judgment, Mr Goldberg’s submissions are correct. My reasons, which largely reflect his arguments, are as follows.

First, the statutory scheme predicates the giving of notice of amounts (of tax) being assessed, whether by the taxpayer or HMRC. This notice requirement applies to (1) returns, (2) amendments to returns, (3) assessments, (4) amendments to assessments, (5) self-assessments, and (6) amendments to self-assessments. For these purposes, albeit not for all purposes, there is no distinction between any of these categories. Ms Nathan drew my attention to the decision of Patten J (as he then was) in Morris v HMRC [2007] EWHC 1181 (Ch), paragraphs 31-35. This drew a distinction between assessments by HMRC and self-assessments by the taxpayer in the different context of the time-limits under sections 34 and 36 of the TMA. This distinction has no application here. A section 28A closure notice is in the nature of being an assessment by the Revenue which is given effect to by directly altering the taxpayer’s self-assessment.

For instance:

In the light of the above, the natural and ordinary meaning and effect of “a closure notice must … make the amendment of the return required to give effect to his conclusions” within section 28A(2) is that (i) the amendment to the return is in the nature of an assessment by HMRC which is achieved by amending the return including the self-assessment contained within it, and (ii) the amendment(s) must be set out in the closure notice; in other words, be notified to the taxpayer in that manner. All assessments within the TMA share this last attribute.

Ms Nathan relied on the previous versions of section 28A of the TMA which have different wording. Section 28A was first inserted into the TMA by section 188 of the Finance Act 1994, and minor amendments were made in the Finance Act 1998. Schedule 29 to the Finance Act 2001 repealed these provisions. Ms Nathan points out that section 28A(5), as originally enacted, provided that the notice completing an officer’s enquiries had to state “his conclusions as to the amount of tax which should be contained in the taxpayer’s self-assessment”. Ms Nathan’s submission was that this wording required the spelling out of an amount. No such requirement is to be found in the current version of section 28A. In my judgment, these points carry little weight. In particular, the scheme of the original section 28A was different to the post-2001 version in that HMRC made no amendments to the return in the closure notice itself and the taxpayer could within 30 days of the section 28A(5) notice amend his self-assessment to reflect HMRC’s conclusions. The current version, including a new section 28A(2), predicates the making of an assessment by HMRC. I therefore read the old section 28A(5) as being the analogue to the new section 28A(1), and not the new section 28A(2).

My second reason for favouring Mr Goldberg’s submissions on this issue is that in my view the weight of authority supports him. My attention was drawn to the following cases.

In Hallamshire Browne-Wilkinson J (as he then was) held that in order to be valid, a tax assessment had to include a statement of the tax payable. This was in the context of the ancien régime of tax assessments being made by HMRC and not by the taxpayer, and Ms Nathan was astute to draw my attention to Auld LJ’s exposition of the current statutory scheme in Langham (Inspector of Taxes) v Veltema [2004] STC 544 (CA), paragraphs 3-4 in particular. In my judgment, Hallamshire cannot provide a conclusive answer to Ms Nathan’s argument that it is the section 28A closure notice which amends the return (without stipulating in what amount); but it is a strong pointer to its incorrectness. In my view, the current regime may be all about self-assessment by the taxpayer rather than executive action by the Crown, but in the present context of section 28A it is HMRC who is deciding what should be paid.

My attention was drawn to Spring Salmon & Seafood Ltd v HMRC, both in the F-tT ([2013] UKFTT 320 (TC)) and in the Upper Tribunal ([2014] UKUT 0488 (TCC)). In that case the closure notices included the assessments under appeal.

In Wong Yau Lam t/a Sunlight Takeway Meals v HMRC [2016] UKFTT 0659 (TC)), the focus of the appeal was section 28B(4) of the TMA. This, as I have already noted (see paragraph 56(4) above) includes a requirement that the individual partners be notified of HMRC’s amendments to their returns. On my understanding, no such amendments were made in Sunlight Takeway Meals, either by the closure notice or otherwise. The F-tT held that compliance with sub-section (4) was not a precondition to the validity of the closure notice (see paragraphs 25-27). Instead, the closure notice took effect under sub-section (3) if it met the requirements of sub-sections (1) and (2) (see the first sentence of paragraph 26). The closure notice had in fact satisfied section 28B(2) because the amendments to the partnership return were included in it. It is true that the F-tT was not required to examine what the position would have been had it not done so.

In Fidex Ltd v HMRC [2016] STC 1920, the Court of Appeal’s focus was Schedule 18 to the Finance Act 1998 and closure notices issued against companies. Paragraph 32 of Schedule 18 requires a closure notice to state HMRC’s conclusions; it does not require the amendment to the return. Paragraph 34 gives the company 30 days in which to amend its return to accord with those conclusions. Again, it is noteworthy, albeit not determinative, that the closure notice under consideration in that case specified the revised corporation tax loss.

Bristol & West Plc v HMRC [2016] STC 1491 shared a similar corporate context. The issue in that case was how a closure notice, which erroneously stated that no amendments were required, should be interpreted. My attention was drawn to paragraph 24(v) of the judgment of Briggs LJ, which provides:

“Having issued a closure notice, HMRC have no power to amend the relevant tax return otherwise than to give effect to the conclusions stated in the closure notice: see para 34(2)(b).”

In my judgment, this passage avails neither party before me. The structure of Schedule 18 of the Finance Act 1998 differs from that of the TMA in that our statute requires HMRC to amend the return at the same time as it issues the closure notice, not later.

Of greater saliency for present purposes is paragraph 35 of Briggs LJ’s judgment, which provides:

“We do not doubt that the conclusion of the enquiry and the expression of HMRC’s conclusions in a closure notice leaves open for future debate, negotiation and settlement the final outcome as to the extent of the taxpayer’s tax liability. But we reject any notion that the closure of the enquiry and the expression of HMRC’s conclusions arising from it can be belittled as a mere procedural pause. Closure makes an important stage at which the enquiry (with HMRC’s attendant powers and duties) ends, HMRC is required to state its case as to the amount of tax due, in the closure notice itself, following which its power to amend the assessment is limited to such amendments as will give effect to those conclusions. These provisions contain requirements of real potential value to the taxpayer …” [emphasis supplied]

Briggs LJ was examining paragraph 32 of Schedule 18 which requires HMRC to “state their conclusions”. It may be seen that this broadly matches the wording of section 28A(1). Briggs LJ was therefore holding that paragraph 32 includes an obligation on HMRC to state their case as to the amount of tax due. My first impression was that this reasoning availed Mr Goldberg’s overall argument because, construing just section 28A(1) and not going any further, HMRC are required to include within their conclusions in the closure notice itself a statement of the amount of tax due. However, Mr Goldberg did not seek to support my preliminary view: there is, he submitted, a difference between specifying an amount and stating a case as to amount. The latter is less prescriptive, and leaves room for reasonable inferences being drawn. I did not understand Mr Goldberg to be disclaiming reliance on Briggs LJ’s dictum that the conclusions must be within the closure notice itself.

I have given Mr Goldberg’s concession careful consideration. Ms Nathan did not make any submissions on paragraph 35 of Briggs LJ’s judgment given what she had heard fall from Mr Goldberg’s lips in oral argument. Ultimately, though, I have concluded that Mr Goldberg is correct, and that I must be grateful to him for causing me to avoid regrettable error. At paragraph 26 of his judgment, Briggs LJ addressed the extent to which a closure notice fell to be construed according to its black letter. He explained that the issue was the correct interpretation of the notice, “as it would be understood by a reasonable person in the position of its intended recipient”. Thus, in my view Briggs LJ was not holding that in all cases it is incumbent on closure notices under Schedule 18 to spell out the amount of tax said to be due. There will be situations in which the taxpayer may reasonably be expected to infer the amount from information available to him and “the relevant objective contractual scene”. Indeed, in straightforward cases it will be obvious from the conclusions what the resultant tax amounts to.

At this stage I should return to the wording of section 28A(5) as applicable in 1998 (“state[s] his conclusions as to the amount of tax …”). It is apparent that this rather chimes with Briggs LJ’s construction of paragraph 32 of Schedule 18 to the Finance Act 1998, with its less specific wording. I think that it must follow from the above that even the wording of the old section 28A(5) did not go quite so far as to require HMRC to state in terms the amount of tax they were claiming was payable. This point clearly cuts both ways, but it is a further reason for disagreeing with Ms Nathan’s submission that there is a material difference between the old wording of section 28A(5) and the current wording of the section, at least in terms of sub-section (1).

In any case, the question arises whether the situation differs under the current wording of section 28A (c.f. paragraphs 32 and 34 of Schedule 18) because of section 28A(2). In my judgment, it does. The requirement, which did not exist before, is to amend the return - in the closure notice itself - to give effect to the officer’s conclusions. This amendment entails, or includes, an amendment to the self-assessment which then has specific consequences not dependent on the taking of any further action by the taxpayer, save (and critically) the ability to appeal the amendment under section 31(1)(b). What is required is not merely the statement of HMRC’s case as to the amount of tax due, but a statement of that amount.

My construction of section 28A fully accords with HMRC’s own internal guidance which uses mandatory language. It also accords with the policies and objects of the TMA which are to ensure certainty, finality and transparency. I asked Ms Nathan whether HMRC were in a position to contradict KPMG’s evidence that they had never previously seen a closure notice which did not state the amount of tax said to be due. Her answer indicated that they were not. I infer that it is HMRC’s almost invariable practice to stipulate the amount, and that exceptions arise only when mistakes are made.

Ms Nathan sought to persuade me that the wording in the Closure Notices, “I am amending the return”, serves to amend the return, and is therefore within section 28A(2). I cannot agree. The Closure Notices reveal no such amendments on their face, and if that is what the sub-section requires I cannot see how wording which does not so state can make a difference. Indeed, this wording is entirely consistent with the officer amending the computerised returns and self-assessments, which I have found did occur on 2^nd February 2016. This is separate administrative action, in the form of the implementation of something that should have taken place but did not. Further, section 28A(2) is not worded so as to authorise an amendment; it is the closure notice itself which achieves the amendment.

For all these reasons, I hold that Mr Goldberg’s submissions are correct on his first, and main, substantive issue. Section 28A of the TMA requires that a closure notice itself amend the taxpayer’s return by stating the amount of tax due: in other words, assess the taxpayer’s tax liability.

The next question which must be addressed is whether section 114 of the TMA can save the error. In order to answer that question accurately, it is necessary to be precise as to how the issue arises for judicial determination at this stage of the analysis. More specifically, one needs to be clear as to how HMRC are asking me to deploy this section in these proceedings.

It should be recalled that, thus far, the only issue I have addressed is the true construction and application of section 28A. I have not yet addressed Ms Nathan’s objection that the taxpayer should have appealed. I have reached the point that the Closure Notices were defective in that they did not contain amendments to the returns, and (perforce) consequential amendments to the self-assessments. Section 59B(5) of the TMA fixes HMRC’s claim to an existing debt only on the basis that there has been an amendment of a self-assessment under section 28A. I have found that there has not been one. It follows that there could be no relevant debt for the purposes of section 59B(5) unless section 114(1) may be recruited to save the error (using shorthand parlance).

To be more precise, section 114(1) does not “save errors”. What it provides in essence is that any purported assessment or other proceeding shall not be “deemed to be void or voidable” if certain conditions are met. Mr Goldberg did not advance submissions about the language I have just highlighted. His submission was simpler. His point was that for present purposes the focus of the enquiry must be “an assessment” at the start of the sub-section, and that there has not been any such assessment at all. It follows, so his submission runs, there is nothing to which section 114(1) may attach.

Ms Nathan’s riposte to this submission was that the correct target for judicial consideration is not “an assessment” but “other proceeding”, which latter term is apt to accommodate a closure notice. She pointed out that we do have the Closure Notices; and, moreover, that it is the taxpayer’s case that these are notices within section 28A(1). Ms Nathan relied on Court of Appeal authority in support of her argument that section 114(1) is wide enough to be deployed in relation to the legal effect of the Closure Notices.

I cannot accept Ms Nathan’s submissions on this specific issue. At this stage of the analysis, the only question is whether there exists a section 59B(5) assessment to found the taxpayer’s liability. The correct approach moves straight from section 28A through to section 59B(5) and then to section 114. Ms Nathan’s “other proceeding” point is only relevant to the separate issue of whether the taxpayer should have brought a section 31 appeal, and I will need to consider it at that stage but not now.

So, the question arises whether section 114(1) is capable of operating in a situation where – if my conclusions about section 28A are correct – there has been no relevant assessment. I agree with Mr Goldberg that the sub-section may apply only where there has been an assessment. It is not a matter of seeking to identify “gross error”, or considering substance in preference to form; the issue is existential.

However, unlike Mr Goldberg I do not propose to stop there. It seems to me that I must proceed to consider Ms Nathan’s submission that the officer made “purported amendments” in the Closure Notice. Ms Nathan’s submission on this aspect fell under a different rubric, but that does not preclude me from addressing it now. Indeed, I am fully satisfied that I should, because section 114(1) uses the verb “purports”.

If Mr Goldberg is correct in his overarching submission that this is a public law case, fit for judicial review rather than statutory appeal, I consider that I must analyse this case using familiar public law tools. Two familiar public law principles apply. The first is that a presumption of validity applies, and that terms such as “void”, “voidable” and “nullity” may confuse: see Lord Diplock in Hoffman-La Roche v DTI [1975] AC 295, at 366A-B. The second is that a statutory term of art such as “determination” (or, as here, “assessment” or “other proceeding”) cannot include a purported determination vitiated by public law error: see Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147. The relevant passages in the Opinions of Lords Reid and Wilberforce are too well known to require direct citation.

There has been difficulty in the past in reconciling these two principles. They work in complete harmony. In the absence of a properly constituted challenge, the general rule is that the decision continues to have legal effect, even if (had such a challenge been brought) it was vitiated by error. Once seized of such a challenge, the effect of the court’s ruling, if legal error is held to exist, is that the decision at issue is held to have no effect.

All these things having been said, I consider that an issue does arise as to whether the effect of section 114(1) is to preclude Anisminic-type arguments. This was not part of Ms Nathan’s forensic armoury, but I raised the issue with Mr Goldberg and he was able to address it. He submitted that such arguments could be made. In my judgment, they cannot. The purpose of section 114(1) is to set out a self-contained statutory code to deal with errors or other “want(s) of form”. It is clear from the first two lines of the sub-section that it is apt to cover purported assessments, and the sub-section states in terms that these shall not be quashed, or declared void or voidable, in certain specified circumstances. In my view, if these circumstances apply, an assessment should be treated as legally valid notwithstanding that it may be possessed of Anisminic-type error. To hold otherwise would be to re-write the sub-section.

Although I cannot accept Mr Goldberg’s submission as high as it was advanced, I can accept a less ambitious version of it. If Ms Nathan were able to persuade me that the officer made a purported assessment in the Closure Notices, in other words, an assessment in some shape or form however erroneous, misconceived or non-compliant, I would conclude that it fell within the term “an assessment” in section 114(1); and I would then have to consider the remainder of the sub-section. However, Ms Nathan cannot persuade me of that. The form of words “I am amending the return” is not a purported assessment (or amendment). It is not an assessment which is capable of falling within the opening words of section 114(1) at all. The situation is not enhanced from HMRC’s perspective by observing that the computer return was simultaneously amended. This would only assist if there were anything in being which could be implemented. There is a distinction between categorical errors, which have existential consequences, and errors of law, which (for these purposes) do not alter the fundamental character of an administrative action. The error here is qualitative, not quantitative, and in my judgment outwith the scope of the subsection.

I now come, no doubt far too late in the day according to her preference, to Ms Nathan’s submission that the taxpayer should have appealed the Closure Notices. This requires an examination of what would, or should, have happened on a hypothetical appeal which we know was never brought. If, pace Ms Nathan’s submission, the F-tT would have declined jurisdiction on any appeal by the taxpayer, her objection leads nowhere. If, on the other hand, the F-tT would have entertained the appeal, notwithstanding the errors in the Closure Notices, it seems to me that her objections would be irrefutable because Autologic applies.

I should deal at the outset with two red herrings. The first is Mr Goldberg’s submission that the taxpayer could not be expected to use the appeal route because his complaint is that HMRC’s decision dated 11^th March 2016 is based on a mistaken premise, namely that a debt was due. The answer to that submission is that, if the taxpayer should have appealed the Closure Notices, it would be an abuse of process to argue that the decision letter is unlawful. Mr Goldberg cannot circumvent the appeal requirement by seeking to assail something different. The second is that there is a procedure under the Insolvency Act 1986 for statutory demands to be challenged, and it was open to the taxpayer to exercise it. The answer to this objection is that Ms Nathan did not submit that I should refuse to entertain this judicial review claim on that basis. In my view, she was right to take that stance on the facts of this case, and I therefore say no more about it.

Ms Nathan’s first submission under this rubric was that a purported assessment is appealable. She drew my attention to the reasoning of the Upper Tribunal Chamber President, Warren J, in Spring Salmon & Seafood Ltd, which was to the effect that even a closure notice issued in the absence of a statutory precondition (e.g. a section 9A enquiry – and, in that case a Schedule 1A enquiry) could be challenged in appellate proceedings. In my judgment, this authority does not assist: there is a distinction between a notice which lacks a condition precedent set out in a separate statutory provision but is otherwise compliant with the terms of section 28A, and one which possesses a gaping hole.

Her second submission was that section 114(1) applies to this situation because the focus should be on “other proceeding” (i.e. the Closure Notices) rather than on “an assessment”.

It was at this stage in Counsels’ arguments that I felt that they were speaking at cross purposes. Mr Goldberg appeared to be adhering to his submission that section 114(1) simply could not apply because the issue was the existence of an underlying assessment for the purposes of section 59B(5). He could not accept that the issue might involve consideration being given to what would or should have happened before the F-tT had his client appealed. On the other hand, although Ms Nathan was clearly submitting that the real question for these present purposes was the scope of the term “other proceeding”, she did not make it crystal-clear that her question arose in the specific context of whether appeal rights should have been exercised. Whether I am being unfair to either or both Counsel may engender perceptions of judicial inflexibility but at the end of the day is irrelevant. I must continue to ask myself whether section 114 could and should have been deployed by the F-tT to cure the omissions in the Closure Notices which I have identified.

I was taken by Mr Goldberg to two authorities under section 114(2) of the TMA. However, the present case concerns section 114(1), and in that regard two authorities are pertinent: the decision of Henderson J (as he was then) in Pipe v HMRC [2008] STC 1911, and the decision of the Court of Appeal in Donaldson.

At paragraph 51 of his judgment in Pipe, Henderson J said this:

“In my judgment there is nothing in the authorities, properly understood, which contradicts this analysis. If the case were one where HMRC had to rely on section 114(1) to cure the defect in the Penalty Notices, I would agree with Mr Conolly that the mistake was of too fundamental a nature to fall within the scope of that subsection. It was indeed a gross error, and one that, viewed objectively, might have been misleading, because it could have led the recipient to believe that an earlier determination had been made by the Commissioners in or before April 2004, and that such earlier determination had either not been notified at all or the notification had gone astray. If the Penalty Notices were the documents which founded liability to the penalties, there would be much to be said for the view, echoing Slade LJ in Baylis v Gregory, that specifying the correct dates is something HMRC must get right. However, Baylis v Gregory, as I have already pointed out (see paragraph 30 above), was not a decision on section 114(2) at all, and the language of section 114(2)(b) is clear and unqualified. The force of the words “any variance” is that no variance of any description between the notice and the determination is to invalidate the determination. I accept that there may come a stage where the error or discrepancy in question is so fundamental in character that it could not properly be described as a “variance” at all; but in my judgment a mistake about dates of the type made in the present case gives rise to a “variance” within the ordinary and natural meaning of that word.”

Strictly speaking, this passage is obiter, but it is to be noted that it was expressly approved by Lord Dyson MR at paragraph 28 of his judgment in Donaldson.

At paragraph 29 of Donaldson, Lord Dyson MR held as follows:

“In my view, the failure to state the period in the notice of assessment in the present case falls within the scope of section 114(1). Although the period was not stated, it could be worked out without difficulty. The notice identified the tax year as 2010-11. Mr Donaldson had been told that, if he filed a paper return (as he did), the filing date was 31 October 2011. The SA Reminder document informed him that, since he had not filed his return by the filing date, he had incurred a penalty of £100. It also informed him that, if he did not file his return by 31 January 2012, he would be charged a £10 daily penalty for every day the return was outstanding. This information was reflected in the notice of assessment. Mr Donaldson could have been in no doubt as to the period over which he had incurred a liability for daily penalty. He knew that the start date for the period of daily penalty was 1 February 2012 and the notice of assessment told him that the end date of the period was 90 days later. The omission of the period from the notice was, therefore, one of form and not substance. Mr Donaldson was not misled or confused by the omission. The effect of section 114(1) is that the omission does not affect the validity of the notice. I do not, therefore, need to consider the further argument advanced by Mr Vallat based on section 114(2) of TMA.”

In Donaldson, the issue was whether HMRC’s non-compliance with paragraph 18(1)(c) of Schedule 55 to the Finance Act 2009 was an error which could be cured by section 114(1). The Court of Appeal held that it could. The error was not fundamental; it went to form rather than substance; the taxpayer was not misled; he could work out the correct date without difficulty.

The issue arising in the present case is more complex. In the first instance it is necessary to determine exactly how the sub-section would operate on a section 31(1)(b) appeal. That appeal would be against “any conclusion stated or amendment made by a closure notice under section 28A”. It follows that, strictly speaking, the appeal is not against the Closure Notices; it would be against the relevant contents of those notices. Even so, on this hypothetical section 31(1)(b) appeal the section 114(1) issue would be: should the F-tT cure the notices by supplying additional content? This is because the F-tT would be looking at those notices in order to determine the substance and scope of the appeal; these would be the key documents under scrutiny.

I have no doubt but that a closure notice is some “other proceeding” for the purposes of section 114(1) (see the breadth of section 113(3)) and Mr Goldberg did not submit otherwise. Furthermore, I agree with Ms Nathan that focusing on “other proceeding” rather than “assessment” serves to broaden the potential scope of the curative power under the sub-section. This is because Mr Goldberg’s existential point becomes less potent. True, there is no relevant “assessment”; but at least there is some “other proceeding”, albeit it is defective.

There are a number of reasons which militate in favour of according section 114(1) a wide range in these circumstances. First of all, let me posit an entirely straightforward case, where the officer gives a clear conclusion on a simple point, fails in his closure notice to amend the return, but the taxpayer may very readily understand how much he ought to be paying. There seems no obvious reason why section 114(1) should not apply to cure the notice on an appeal to the F-tT. In this hypothetical case the defect could in one narrow sense be described as “fundamental”, and contrary to “the intent and meaning of the Taxes Acts”, inasmuch as a statutory precondition to validity does not exist; although no one has been misled and the error is technical. I prefer an analysis which suggests that the issue is one of fact and degree. Secondly, and relatedly, I should revert to Briggs LJ’s point that objective contractual principles should apply. How would a reasonable taxpayer understand the notice? In my example of an entirely straightforward case, the taxpayer would understand the consequences of HMRC’s conclusions without the need for expert advice. Yet, if Mr Goldberg’s objections were merited, even in this very simple hypothetical case there would be no power under section 114(1) to cure the defect.

I would not be prepared to hold that there could be no circumstances in which section 114(1) may be deployed to save a defective closure notice, even one which omits an essential statutory ingredient such as an assessment. The real question which arises is whether, in the circumstances of the present case, the omission is simply too significant and/or fundamental to be capable of salvation.

The issue is not clear-cut. On the one hand, the Closure Notices make it clear that HMRC are rejecting the whole of the taxpayer’s claims for relief. The taxpayer is a sophisticated businessman who has the benefit of high-powered advice. The APNs and the FNs explained HMRC’s position very clearly, and the taxpayer did not place any of the amounts (qua figures) in dispute. Even setting to one side the point that I have found that the figures and sufficient of the methodology would have been visible in the “view accounts” section of the website, KPMG could have done the arithmetic for themselves. Instead, they waited until almost the last possible moment before raising their objections on the notices. On the other hand, this was not a simple case: it had taken many years to resolve (unconscionably long, in my view), and KPMG were continuing to raise other technical arguments in their replies to the APNs.

I assured Mr Goldberg during the hearing that I would not permit myself to be swayed by any opinion as to his client’s behaviour. That continues to be the case. The taxpayer’s tax avoidance schemes have failed, and he knows it. He knows too from the conclusions in the Closure Notices that the schemes have failed tout court. I repeat that I am not impressed by KPMG’s contention that they believed that the tax due was likely to be in excess of £20M. If I can do the sums using a pocket calculator, and can arrive at a figure which is adrift by a mere £237,000, so could they. In fact, they could do much better because they knew the amount of the overpayments to the nearest penny, these being on the system. Although the Closure Notices did not condescend to the detail of KPMG’s technical arguments directed to the APNs, HMRC were saying that the whole of the losses claimed were being disallowed.

Moreover, it must be relevant to the section 114(1) question that HMRC did amend the taxpayer’s computer returns on 2^nd February 2016, that these amendments were consistent with the conclusions set out in the notices, and these were visible to the taxpayer online. The fact that the Tax Calculation and Revision Notice would have been made available at any stage upon request is not a factor which I can take into account in the context of section 114(1), but had I found that this notice was in fact received by KPMG shortly after 2^nd February 2016, the taxpayer’s case on the section 114(1) would have been flimsy. For the reasons I have given, I do not find that its non-receipt can make all the difference. Nor, for the avoidance of doubt, would it matter if, owing to a technical “glitch”, the amendments were at all material times invisible on the taxpayer’s “side” of the online system. I have firmly concluded that Mrs Cook made amendments on 2^nd February 2016 which were consistent with her conclusions set out in the Closure Notices (see paragraphs 32-33 above).

It is no answer, in my judgment, that the taxpayer protests that he could not have issued a notice of appeal against assessments which did not exist. I fully understand that he wished to appeal assessments, but there was nothing to preclude him from issuing notices of appeal under section 31(1)(b) which sought to assail HMRC’s conclusions. I should emphasise that it was not Mr Goldberg’s submission that these conclusions were defective or non-compliant with section 28A(1). In my judgment, although the conclusions were brief, they were sufficient to enable the taxpayer to understand where he stood with HMRC. If my analysis as to the scope of section 114(1) is right, the taxpayer should have been aware that the F-tT would on his appeal have amended the Closure Notices to remedy the omission.

Ultimately, I am driven to conclude that Ms Nathan’s submissions on this issue are well-founded, and that the F-tT, on a hypothetical appeal under section 31(1)(b), would and should have deployed section 114(1) to cure the defects in the Closure Notices. It follows – albeit as an end-point in the analysis and not as a starting-point – that the taxpayer should have appealed the conclusions in the notices, and that this application for judicial review cannot proceed, it being an abuse of process.

Ms Nathan submitted in the final alternative, if all else failed, that if the Closure Notices are invalid and cannot be saved by section 114(1), there would be nothing to prevent HMRC serving further closure notices in the future. In my view this alternative submission should only be considered on the footing that I may be wrong about section 114(1).

Mr Goldberg’s valiant riposte to this submission was advanced on a number of levels. Ultimately, his points were that section 28A(1) was the key provision which closed the enquiry (it has been properly fulfilled), that section 28A(2) is not fundamental to the validity of the notices, and (or put another way) section 28A(2) “contains a condition subsequent as to effectiveness, not a condition precedent to validity”.

I cannot accept Mr Goldberg’s submissions. Given the terms of section 28A(3), there can be no intelligible distinction between that which is precedent and subsequent. I agree with the analysis of the F-tT in Sunlight Takeaway Meals that both sub-sections (1) and (2) are preconditions to the validity of a closure notice (see paragraph 26 of its decision): in other words, that no distinction falls to be drawn between them. These preconditions cannot be notionally decoupled. I appreciate that this observation has the tendency to enhance the taxpayer’s case on section 114(1), but in that regard I have already taken it into account. In any event, the taxpayer is caught on a variant of Morton’s fork. If he is right about section 114(1), the Closure Notices are invalid and cannot be cured; the section 9A enquiry continues; and there is nothing to prevent the enquiry being concluded under section 28A at some future date. If I am right about section 114(1), the issue does not arise because he has already lost. (There is a mild irony in my invoking Morton’s fork in a tax case, particularly in circumstances where I am using it against the taxpayer, rather than as a criticism of the conduct and practices of HMRC.)

Ms Nathan observed that Mr Goldberg’s case possesses a Janus-faced quality in this regard, and I feel that her classical allusion was well directed. I do not interpret her as suggesting that he was being two-faced; rather, that he was trying to have his cake and eat it. The fact remains that Mr Goldberg has chosen to bring these proceedings in the Administrative Court, and I must apply ordinary public law principles to the issues. Anisminic does not apply to section 114(1), but it does apply to Mr Goldberg’s argument that HMRC find themselves stymied.

I have mentioned a variant of Morton’s fork because its twin prongs are not equally sharp, and some use this metaphor to describe two inconsistent arguments which are equally specious. The taxpayer loses either way but one defeat may not be quite as bad as the other. If I had reached a different conclusion on the principal issues, this application for judicial review would have succeeded but HMRC would have been able to issue fresh closure notices. These could have been appealed in due course, and KPMG’s technical points on the APNs considered by the F-tT. But, my decision on the principal issues means that there is now no possibility of an appeal, and the taxpayer must pay up. Albeit tempting, it would be supererogatory for me to express any view on these technical points which, were I to be overturned by the Court of Appeal, might live to fight another day.

I am dismissing this application for judicial review on the basis that the taxpayer had an effective right of appeal which he should have exercised. In reaching that conclusion, I have upheld Mr Goldberg’s submissions on section 28A(2) of the TMA but – in this particular context - have rejected them on section 114(1).

If the last of these conclusions were incorrect, I would have granted the judicial review application on the basis that no statutory debt had arisen under section 59B(5) of the TMA as at the date of the decision under challenge. But, I would also have held that there was nothing to prevent HMRC issuing further closure notices under section 28A of the TMA.

The Claimant’s application for judicial review is dismissed.

Permission to appeal to the Court of Appeal is refused.

Any appeal to the Court of Appeal must be brought by Notice of Appeal (seeking an application for permission to appeal to that court) filed no later than 4pm on Tuesday 14^th March 2017.

The Order of Kerr J dated 29^th March 2016 be discharged.

The Claimant is to pay the Defendants’ costs of and occasioned by the application.