Robert Huish v The Commissioners for HMRC

This is an appeal against discovery assessments made under section 29 Taxes Management Act 1970 (“TMA”) issued on 18 February 2020 and amounting in total to £3,740 for the tax years 2015/16 to 2017/18 (inclusive).

At the outset of the hearing Ms Aziz intimated that, having reviewed the assessments, she requested that the assessment for 2015/16 be reduced to NIL leaving only the assessments for 2016/17 and 2017/18 amounting in total to £3,576 under appeal.

With the consent of the parties, the hearing was conducted by video link using MS Teams. Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

We had a hearing bundle extending to 127 pages.

For one of his arguments, the appellant relied upon four cases which he said had been decided in 2021 and supported his position namely, Collins, Harrison, Baxter and Hicks. We granted an adjournment so that we, and HMRC, could check those cases since the names were not familiar. On reconvening we asked the appellant if he had used AI to assist in preparation for the hearing and he confirmed that he had done so. He was horrified when we pointed out, and Ms Aziz confirmed, that those alleged cases did not exist. We attach no blame to him, since he is a litigant in person but we have recorded the names so that others do not fall into the same trap.

The facts are not in dispute.

The appellant has two children and has been in receipt of child benefit since before the introduction of the High Income Child Benefit Charge (“HICBC”) with effect from January 2013.

It is not disputed that the appellant’s Adjusted Net Income for each of the tax years in question was in excess of £50,000. Throughout the years in question, the appellant was in employment and had paid his tax through the PAYE system. In fact, he had only ever paid tax through the PAYE system. He had never filed a self-assessment return.

The appellant was unaware of the HICBC until he received a “nudge” letter from HMRC in November 2019.

On 23 November 2019, he responded intimating that he had asked for copies of his P60s and P11Ds for all of the years since 2013 and when those came to hand, as requested, he would complete the child benefit tax calculator.

On 4 December 2019, HMRC replied with guidance as to how to use the calculator.

On 6 December 2019, the appellant completed the calculator and emailed HMRC advising that the outcome was that he was due to pay tax for 2016/17 and 2017/18. He asked for advice as to how to make payment and how to move forward for the following years.

On 20 December 2019, HMRC wrote to the appellant stating that they had reviewed the calculations and whilst they agreed with his figures for 2016/17 and 2017/18 they had identified an error in relation to 2015/16. They calculated the tax due in that year to be £164.

The appellant responded later that day with an updated calculation which agreed with HMRC’s figures.

On 6 January 2020, HMRC replied. They confirmed that they accepted that the appellant had not deliberately failed to notify HMRC of his liability to the HICBC and that in those circumstances they would not be charging a penalty. They stated that they would be raising revenue assessments for the applicable years.

On 18 February 2020, HMRC issued three assessments being £164 for 2015/16 and £1,788 for each of 2016/17 and 2017/18. They indicated that they would send a self-assessment notice to file a tax return for the 2018/19 tax year and that should be filed by 31 January 2020.

On 2 March 2020, the appellant contacted HMRC to arrange a payment plan.

On 14 April 2020, the appellant sent two letters to HMRC. The first enclosed a copy of a letter that he had sent to his MP. He confirmed that he had stopped all payments of child benefit with effect from 16 March 2020. He argued that if he had been notified in 2013 or 2015 when his salary/benefit in kind payments entered the banding for the HICBC, he would have stopped the child benefit with immediate effect. He argued that he was being “unfairly punished for a lack of communication from HMRC”. As soon as he had been told about the HICBC he had acted swiftly to clarify the situation. He asked if any further information would be required as he wished “HMRC to review all of the tax charges”.

The second letter reiterated some of that information and stated “I will appeal the total charge and have written to my local MP”.

On 19 April 2024, the appellant wrote again to HMRC. He referred to the decision of Judge Aleksander and Mr Howard in Paul Brown v HMRC [2024] UKFTT 00245 (TC) (“Brown”) which had been published on 20 March 2024. He asked if he would be able to make an overpayment relief claim in relation to the HICBC.

On 27 September 2024, HMRC replied to that letter treating it as an appeal of the three assessments. It was explained that the time limit for appealing was 30 days from the date when the decision was sent to him and therefore his appeal was late.

The appellant replied on 7 October 2024 and stated that it was wrong to say that his appeal was dated 19 April 2024. He stated that he had appealed at the time that he was told to pay the HICBC. He stated “Please respond to my original and follow-up appeal”.

On 22 October 2024, HMRC responded narrating the contact with the appellant up to and including 2 March 2020. They rejected his appeal.

On 19 November 2024, the appellant filed his appeal with the Tribunal.

On 11 March 2025, HMRC filed a Notice of Objection to the late appeal.

That Notice was subsequently withdrawn on the basis that a “recent system review” had disclosed the letters of 14 April 2020 and it was accepted that the appellant had appealed the assessments. Although the original appeal was 26 days late, HMRC confirmed that they did not object to that.

Until the Finance Act 2022 (‘FA 2022’) came into force on 24 February 2022, section 29(1)(a) TMA 1970 provided, as far as relevant to this appeal, that:

“29(1) If an officer of the Board or the Board discover, as regards any person (the taxpayer) and a year of assessment—

(a)

that any income which ought to have been assessed to income tax, or chargeable gains which ought to have been assessed to capital gains tax, have not been assessed, or

… the officer or, as the case may be, the Board may, subject to subsections (2) and (3) below, make an assessment in the amount, or the further amount, which ought in his or their opinion to be charged in order to make good to the Crown the loss of tax.”

Subsections (2) and (3) of section 29 TMA only apply where the taxpayer has made and delivered a return and cannot apply in this case as the appellant did not file a self-assessment tax return in the years assessed.

In relation to assessments under section 29 TMA to collect the HICBC, a series of decisions relating to an appeal brought by Mr Jason Wilkes (by the FTT in Jason Wilkes v HMRC [2020] UKFTT 256 (TC) (‘Wilkes FTT’), upheld by the Upper Tribunal in HMRC v Jason Wilkes [2021] UKUT 150 (TCC) (“Wilkes UT”) and confirmed by the Court of Appeal in HMRC v Wilkes [2022] EWCA Civ 1612 (‘Wilkes CA’)) held that the HICBC was “neither ‘income’ nor even charged on income” nor was it “income which ought to have been assessed to income tax” or an “amount which ought to have been assessed to income tax” (see Wilkes CA at [29]). Accordingly, the HICBC could not be assessed under section 29(1)(a) TMA.

Section 29 TMA 1970 was amended by the Finance Act 2022 (“FA 2022”). Section 97 amended section 29(1)(a) to read “that an amount of income tax or capital gains tax ought to have been assessed but has not been assessed”. The change in wording introduced by section 97 FA 2022 reversed the decisions in the Wilkes cases and allowed HMRC to make discovery assessments, subject to the usual conditions, in relation to the HICBC and some other matters.

The new wording had retrospective effect but that was subject to an exception for discovery assessments in respect of the HICBC in relation to which notice of appeal had been given to HMRC on or before 30 June 2021 and which met certain conditions. Section 97 reads:-

“97 Discovery assessments for unassessed income tax or capital gains tax

(1)

In section 29 of TMA 1970 (assessment where loss of tax discovered), in subsection (1), for paragraph (a) substitute—

“(a)

that an amount of income tax or capital gains tax ought to have been assessed but has not been assessed,”.

(2)

In the Registered Pension Schemes (Accounting and Assessment) Regulations 2005 (S.I.2005/3454), omit regulation 9 (which modifies section 29(1)(a) of TMA 1970).

(3)

The amendments made by this section—

(a)

have effect in relation to the tax year 2021-22 and subsequent tax years, and

(b)

also have effect in relation to the tax year 2020-21 and earlier tax years but only if the discovery assessment is a relevant protected assessment (see subsections (4) to (6)).

(4)

A discovery assessment is a relevant protected assessment if it is in respect of an amount of tax chargeable under—

(a)

Chapter 8 of Part 10 of ITEPA 2003 (high income child benefit charge),

(b)

section 424 of ITA 2007 (gift aid: charge to tax),

(c)

section 205 or 206 of FA 2004 (pensions) but only where the section is applied by Schedule 34 to that Act, or

(d)

section 208, 209, 214, 227 or 244A of FA 2004 (pensions), including where the section is applied by that Schedule.

(5)

But a discovery assessment is not a relevant protected assessment if it is subject to an appeal notice of which was given to HMRC on or before 30 June 2021 where—

(a)

an issue in the appeal is that the assessment is invalid as a result of its not relating to the discovery of income which ought to have been assessed to income tax but which had not been so assessed, and

(b)

the issue was raised on or before 30 June 2021 (whether by the appellant or in a decision given by the tribunal).

(6)

In addition, a discovery assessment is not a relevant protected assessment if—

(a)

it is subject to an appeal notice of which was given to HMRC on or before 30 June 2021,

(b)

the appeal is subject to a temporary pause which occurred before 27 October 2021, and

(c)

it is reasonable to conclude that the temporary pausing of the appeal occurred (wholly or partly) on the basis that an issue of a kind mentioned in subsection (5)(a) is, or might be, relevant to the determination of the appeal.

(7)

For the purposes of this section the cases where notice of an appeal was given to HMRC on or before 30 June 2021 include a case where—

(a)

notice of an appeal is given after that date as a result of section 49 of TMA 1970, but

(b)

a request in writing was made to HMRC on or before that date seeking HMRC’s agreement to the notice being given after the relevant time limit (within the meaning of that section).

(8)

For the purposes of this section an appeal is subject to a temporary pause which occurred before 27 October 2021 if—

(a)

the appeal has been stayed by the tribunal before that date,

(b)

the parties to the appeal have agreed before that date to stay the appeal, or

(c)

HMRC have notified the appellant (“A”) before that date that they are suspending work on the appeal pending the determination of another appeal the details of which have been notified to A.

(9)

In this section—

“discovery assessment” means an assessment under section 29(1)(a) of TMA 1970, and

“HMRC” means Her Majesty’s Revenue and Customs, and

“notified” means notified in writing.”

The key issue is that this amendment made to section 29(1) TMA has retrospective effect under section 97(3)(b) FA 2022 but only if the discovery assessment is a “relevant protected assessment” as defined in sections 97(4) to (7) FA 2022. Otherwise, it only has effect for the tax year 2021-22 and subsequent years, ie it would not apply to the assessments under appeal.

In summary, the retrospective changes made by this section do not apply to an appeal that was made on or before 30 June 2021 which concerned the issue identified in the decisions in the Wilkes cases, that issue was raised by a party or the FTT before that date, or the appeal was subject to a temporary pause on or before 27 October 2021 because of that issue.

HMRC argue that, in his letters of appeal dated 14 April 2020, the appellant did not say that the assessments were invalid (so section 97(5) FA 2022 was not engaged). It is not in dispute that there was no temporary pause because of the Wilkes issue and accordingly section 97(6) FA 2022 was not engaged. Their stance is that the assessments were protected assessments.

HMRC relied upon Niewiarowski v HMRC [2023] UKFTT 00649 (“Niewiarowski”) where, at paragraph 39 the Tribunal agreed with Judge Sinfield and Mr Howard in Hextall v HMRC [2023] UKFTT 390 (TC) (“Hextall”) where they found that it is not necessary for the appellant to mention Wilkes FTT or UT specifically. The issue may be raised by describing the issue or the Wilkes cases in general terms. The Tribunal quoted paragraph 47 of Hextall which reads:-

“The reference must be such, however, as to make clear that the point to be considered

is whether the assessments under appeal were invalid on the ground that there could not have been a discovery under section 29(1)(a) TMA because the HICBC was not income which ought to have been assessed to income tax.”

The appellant relies on the fact that he was subject to PAYE. It was his benefits in kind which took him over the threshold for the HICBC, and only marginally so, for the first time in 2015/16 but he was simply unaware of the HICBC.

HMRC had access to his full PAYE and child benefit records so, at all times, they had all the information that they required.

HMRC had not produced the “nudge” letters; he relied upon Brown.

He had made it clear in his two appeal letters that he had been challenging everything about HICBC; he now relied upon Wilkes.

He felt “very hard done by” as he had done everything that he could; the HICBC legislation was unfair.

Whilst we understand that the appellant believes that the law is not only unfair but also unjust, the Upper Tribunal in HMRC v Hok [2012] UKUT 363 (TCC) made it clear that this Tribunal cannot consider whether the law is fair or not.

We pointed out that we were aware that Niewiarowski had been appealed to the Upper Tribunal but that appeal had not yet been heard.

The Tribunal decision in Niewiarowski turned on the fact there had been no reference to Wilkes, ie the decision followed Hextall. In this case too there was not specific reference to Wilkes, but there could not have been in this instance since the FTT decision in Wilkes was only issued on 15 June 2020 and the appellant’s appeal was dated 14 April 2020.

After the adjournment, Ms Aziz confirmed that the appeal in Niewiarowski is listed to be heard in the summer of 2026 (in fact it is scheduled for 21 and 22 July 2026) together with the appeal in Fera v HMRC [2023] UKFTT 00961 (“Fera”).

At paragraphs 43 to 49 in Fera, Judge Gething and Mr Shearer had taken a different approach to that taken in Hextall in relation to the question of whether the retrospective amendment to section 29(1) TMA made by section 97 Finance Act 2022 applied.

The first point that they made, with which we agree, is that the discovery assessments when issued were invalid unless validated by section 97 FA 2022 (on the basis that child benefit was not, and is not, taxable income so the condition in section 29(1)(a) TMA, as it then read, was not satisfied).

HMRC bear the burden to establish that section 97 FA 2022 applies to validate the discovery assessments retrospectively and it is for the appellant to demonstrate that the conditions in section 97(5) FA 2022 are satisfied.

In Fera it was held that Mr Fera had challenged the validity of the discovery assessment, albeit in generic terms, because:

“44… A simple appeal against an assessment made under section 29(1)(a), other than one which accepts the principle behind the assessment but challenges the computation, must inherently be challenging the validity of the assessment and that must involve in this case whether the elements of subsection (1)(a) were satisfied at the date of issue.

45.

As section 29(1)(a) refers to a failure to include income in a self-assessment return, an issue in this appeal must be that the discovery assessment is invalid because there has been no omission of income in a self-assessment return and as the issue is inherent it must be treated as having been raised…”.

In then holding that, whether the matter was raised was a question of law, they found that the issue had necessarily been raised before 30 June 2021. Incidentally, they went on to find as a matter of fact that it had been raised timeously.

They declined to adopt the view expressed in Hextall that the word “raised” must mean that the issue was specifically identified by a party or the Tribunal. In essence they found that that imposed too great a burden on an unrepresented appellant with no legal knowledge.

Simply put, we agree.

The appellant’s position in this instance is unequivocal. As can be seen from paragraphs 18 and 19 above, he had made it clear that he formally challenged the decision to charge the HICBC. As in Fera we are wholly unsurprised that his appeal was expressed in generic terms given his lack of knowledge of tax legislation. However, we too find that, both as a matter of fact and law, in his letters of 14 April 2020, he did raise theissue ofthe validityof the discovery assessments and did so before 30 June 2021.

In consequence, we consider that none of the discovery assessments in this case is a protected assessment because in each of those assessments the conditions of section 97(5) FA 2022 were satisfied.

We allow the appeals.

In the event that we are wrong, we confirm that, given HMRC’s concession, the appellant’s appeal against the 2015/16 assessment succeeds in any event.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent