Embiricos: HMRC cannot issue a partial closure notice without specifying the amount of tax due

17 February 2021

In HMRC v Embiricos [2020] UKUT 370 (TCC), the Upper Tribunal (UT), in allowing HMRC's appeal, has held that HMRC cannot issue a partial closure notice without specifying how much tax is due.


Mr Epaminondas Embiricos (the taxpayer), filed tax returns for the years 2014/15 and 2015/16. He stated in his returns that he was entitled to be taxed on the remittance basis (i.e. that he is only liable for tax on any overseas income and gains to the extent that they are remitted to the UK) as he was domiciled outside the UK. 

HMRC opened enquiries into the taxpayer's returns and eventually concluded that he was domiciled in the UK and therefore not entitled to be taxed on the remittance basis.

The taxpayer asked HMRC to issue a partial closure notice (PCN) in relation to the open enquiries to enable him to appeal the discrete issue concerning his domicile status. HMRC refused to issue a PCN on the basis that it could not issue a PCN until it had quantified the amount of tax which would be due if it was correct about the taxpayer's domicile status. To this end, HMRC issued to the taxpayer an information notice pursuant to paragraph 1, Schedule 36, Finance Act 2008 (the information notice) requiring him to provide certain information which it believed would enable it to calculate the tax due. 

The taxpayer did not consider it either necessary or appropriate for HMRC to have details of his overseas income and gains before the question of his domicile was determined. He therefore applied to the First-tier Tribunal (FTT) for a direction requiring HMRC to issue a PCN pursuant to section 28A, Taxes Management Act 1970 (TMA). He also appealed against the information notice on the basis that the information was not reasonably required until his domicile status had been confirmed.

FTT decision

The application was granted and HMRC was directed to issue a PCN.  The taxpayer's  appeal against the information notice was allowed as the information contained in that notice was not reasonably required pending determination of the taxpayer's domicile status.

The TMA permits HMRC to issue PCNs for "any matter to which the enquiry relates" and the FTT held that the matter of the taxpayer's domicile was a separate matter to the question of how much tax was due if the remittance basis did not apply. 

HMRC had submitted that the case of R (Archer) v HMRC [2016] EWHC 296, which determined that a closure notice was not valid unless it stated the amount of tax due, applied in the circumstances of the instant case. The FTT distinguished Archer on the grounds that the case had been decided before PCNs existed and the PCN regime had brought about a fundamental change to the relevant legislation. 

HMRC appealed to the UT.

UT decision

HMRC's appeal was allowed. 

In the view of the UT, the FTT had incorrectly interpreted the principles enunciated in Archer. The PCN regime was introduced to modify the existing closure notice regime and this gave rise to the inference that the existing law regarding closure notices would continue to apply, unless there was a contrary indication. This reasoning was consistent with that adopted by the FTT in The Executors of Mrs R W Levy v HMRC [2019] UKFTT 418 (TC). In that case, the FTT held that PCNs should be subject to the same statutory requirements as full closure notices.

The UT also referred to section 50(6), TMA, which requires the FTT to reduce the amount of an assessment on appeal if it appears to it that the appellant is overcharged by any assessment. In the view of the UT, this provision indicates that only closure notices that contain an assessment to tax were contemplated by the legislation. 

In addition, the UT noted that under section 28ZA, TMA, any question arising in connection with the subject-matter of an enquiry opened under sections 9A or 12AC, TMA, may be referred to the FTT for determination. Any such referral must be made jointly by both the taxpayer and HMRC and it could not therefore have been Parliament's intention to create an alternative mechanism whereby a taxpayer could require HMRC to make an early determination which could then be referred to the FTT for determination. 

The FTT had indicated that if its decision regarding the PCN was incorrect, it would have rejected the taxpayer's appeal against the information notice. As no appeal had been made on that issue, the UT confirmed that decision.


The UT's decision provides some much needed clarification in this area of the law as this issue had only been considered by the FTT on one previous occasion in Levy and it had reached a different conclusion in that case.

Given the importance of this issue, the taxpayer may seek to appeal to the Court of Appeal. 

A copy of the decision can be viewed here

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