The recent Supreme Court case of Tinkler v HMRC [2021] UKSC 39 dealt with the consequences of an administrative error. A notice of enquiry was not sent to the correct address. This is problematic because the statutory provision requires that a taxpayer is given notice of an enquiry.
But nobody seemed to notice this mistake initially – the taxpayer’s agents had been made aware of the enquiry and dealt with HMRC accordingly.
It was only raised by the taxpayer as an issue about a decade after the enquiry was opened.
HMRC sought to rely upon the doctrine of “estoppel by convention” to prevent this mistake from invalidating the enquiry (and there was approximately £635,000 at stake, so this would not have been inconsequential). The Supreme Court ultimately found in favour of HMRC.
Whilst one can have sympathy for both sides to this dispute, there is one lingering problem that I have with the judgment. This is that HMRC actually realised the mistake was made in late 2005. Corrective action could have been taken then (i.e. a new notice of enquiry could have been sent to the correct address of the taxpayer), but it was not. Quite why this didn’t operate to prevent HMRC from raising the estoppel argument I do not know.
A fuller explanation of the case and my thoughts on the Supreme Court judgment have now been published in the British Tax Review.
The abstract for the case note reads as follows:
“Mistakes happen. For all the heat that can be generated by legal arguments, at the heart of the recent Supreme Court case of Tinkler v Revenue and Customs is the question of what approach the law should take where an official within HMRC has made a simple mistake, which went uncorrected – a notice of enquiry was sent to the wrong address.”
It can be downloaded free from SSRN.
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