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Vitol Aviation – Tribunal directs HMRC to issue closure notices where diverted profits tax review periods are ongoing

01 December 2021

In Vitol Aviation UK Ltd and others v HMRC [2021] UKFTT 0353 (TC), the First-tier Tribunal (FTT) granted the Applicants' application for closure notices in respect of corporation tax enquiries, notwithstanding that the review periods for diverted profits tax (DPT) notices were ongoing in respect of the same accounting periods.


The Applicants were all members of the Vitol corporate group, which principally traded energy and commodities globally. HMRC issued DPT notices to Vitol Services Ltd (VSL) and Vitol Broking Ltd (VBL), two of the Applicants, in respect of the two accounting periods ended 31 December 2016 and 2017. The review period for these notices was ongoing at the time of the hearing before the FTT.

HMRC also opened enquiries into the corporation tax self-assessment returns filed by the Applicants in respect of the accounting periods ended 31 December 2016, 2017 and 2018 (the Enquiries).

HMRC refused to issue closure notices in respect of the Enquiries. The Applicants therefore applied to the FTT for a direction, under paragraph 33, Schedule 18, Finance Act 1998, requiring HMRC to issue closure notices.

FTT decision

HMRC submitted that they had reasonable grounds for refusing to issue closure notices because:

1. the Applicants had not provided information reasonably requested by HMRC and which was required to enable HMRC to arrive at conclusions needed to formulate the closure notices (Ground 1); and

2. the issue of closure notices for VBL and VSL would pre-empt the end of the DPT review periods for those companies (Ground 2).

With regard to Ground 1, the FTT found that, before it issued the relevant information request, HMRC was in a position where it had made an informed decision as to the relevant matters under enquiry and had set out its conclusions and also the basis on which amendments could be made to the relevant returns. The FTT therefore concluded that the continuing queries for which HMRC requested additional material did not comprise reasonable grounds for not issuing the closure notices sought by the Applicants.

In respect of Ground 2:

  • the FTT noted that Parliament had not enacted a provision that clearly stated that a corporation tax enquiry could not be closed during the DPT review period. In the absence of such a provision, the FTT found that the fact that the issue of closure notices would enable the Applicants to appeal amendments made to their tax returns while another hypothetical taxpayer would not have any appeal rights, because there was no enquiry into their return, did not amount to reasonable grounds for refusing to issue a closure notice; and
  • the FTT found as a fact that HMRC had established what it considered to be the correct amount of corporation tax to be paid on the profits in dispute. The FTT decided that the purpose of the DPT legislation would therefore be satisfied if the closure notices were issued in this case, as the effect of issuing the closure notices would be to give the intended effect to provisions of the DPT legislation (i.e. the correct amount of corporation tax would be paid on the disputed profits).

The FTT therefore directed HMRC to issue closure notices in respect of each of the Enquiries.


One of the keenest areas of contention between HMRC and taxpayers is the length of time that enquiries can take before they are concluded and it is not uncommon for enquiries to become protracted and long-running. Such enquiries can be commercially disruptive and consume a great deal of management time. 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. Increasingly, taxpayers are adopting a more proactive approach, as the Applicants in this case appear to have done, and are seeking an appropriate direction from the FTT requiring HMRC to issue a closure notice. In appropriate circumstances, taxpayers should not be reticent about making such an application to the FTT.

This decision also clarifies the interaction between DPT review periods and corporation tax enquiries. Given the decision contradicts HMRC's policy in this important area, it is likely that HMRC will seek to appeal the decision to the Upper Tribunal.

The decision can be viewed here.