Water cooler and triangular chairs

Tribunal orders HMRC to close its enquiries

12 April 2023. Published by Alexis Armitage, Senior Associate

In J Hitchins and others v HMRC [2023] UKFTT 127 (TC), the First-tier Tribunal (FTT) granted the taxpayers' applications, made pursuant to section 28A, Taxes Management Act 1970 (TMA 1970), for a direction requiring HMRC to issue closure notices.


Jeremy, Jonathan and Stephen Hitchins were three brothers whose father, Robert Hitchins, had founded a business, Robert Hitchins Group Ltd (RHG), in 1960. By the time HMRC opened its current enquiries, the business was ultimately owned by a discretionary settlement in Guernsey via companies incorporated and resident in Bermuda. 

In 2003, RHG paid a dividend of £40m and in 2014 HMRC opened enquiries into the returns of all three brothers that focused mainly on whether the dividend could give rise to a charge under Chapter 2, Part 13, Income Tax Act 2007, relating to transfers of assets abroad (ToAA). This was not the first enquiry by HMRC into the tax affairs of the taxpayers. The underlying events under enquiry had been disclosed to HMRC between 2006 and 2008 in the course of a previous enquiry which had been closed by the same HMRC Officer without any amendments in 2011.

Section 28A(4), TMA 1970, enables a taxpayer to apply to the FTT for a direction that HMRC issue a closure notice within a specified period. Section 28A(6) provides that the FTT is obliged to give such a direction unless it is satisfied that there are reasonable grounds for not doing so. The burden is therefore on HMRC to demonstrate that there are reasonable grounds for refusing any such application. 

The taxpayers applied under section 28A for a direction compelling HMRC to issue closure notices in respect of a total of 13 open enquiries into their self-assessment tax returns.

FTT decision

The taxpayers' applications were granted. 

The FTT held that HMRC's enquiries had been conducted to a point where it was reasonable for HMRC to make an “informed judgment” of the matter, even though every line of enquiry may not have been pursued to the end. Whilst HMRC had not received answers to all of their questions, the FTT considered that the outstanding questions relating to the £40m distribution did not have a reasonable basis and amounted to a "fishing expedition".

The FTT disagreed with HMRC that if it was compelled to issue closure notices now, they would be in vague and uninformative terms. The FTT commented that HMRC had sufficient information on which to be able to close its enquiries relating to the potential for a ToAA charge in respect of the distribution. The FTT further commented that the enquiries had "gone on for far too long'"

Perhaps not surprisingly in the circumstances, the FTT concluded that HMRC had failed to demonstrate that there were reasonable grounds for refusing the taxpayers' applications for closure notices and directed that HMRC issue closure notice within 6 weeks of the FTT's decision. 


This decision will be welcomed by taxpayers and their advisers. One of the keenest areas of contention between HMRC and taxpayers is the length of time enquiries can take before they are finally concluded. As the legislation does not provide a time limit by which HMRC is required to conclude an enquiry, enquiries often become unfocussed and protracted. There will therefore be occasions when a taxpayer decides that an enquiry has gone on for long enough and wishes to bring it to an end. Section 28A, TMA 1970, provides an effective mechanism by which a taxpayer can apply to the FTT for a direction requiring HMRC to close its enquiry within a specified time period and we are finding that clients are increasingly choosing to make such an application. 

The decision can be viewed here.