No power for HMRC to issue partial closure notice without assessment of tax due

23 February 2022. Published by Keziah Mastin, Associate

In Embiricos v HMRC [2022] EWCA Civ 3, the Court of Appeal concluded that HMRC cannot issue a partial closure notice in respect of domicile status and a remittance basis claim without an assessment of the amount of tax due.


In his self-assessment tax returns, Mr Embiricos claimed for the benefit of the remittance basis of taxation, on the basis that he was not domiciled in the UK. On his returns he did not provide details of tax on overseas income or gains, nor did he confirm whether his unremitted income or gains exceeded £2,000.

HMRC opened an enquiry into Mr Embiricos' returns under section 9A, Taxes Management Act 1970 (TMA), stating "I only intend to look at your claim to be non-domiciled in the UK". HMRC concluded that Mr Embiricos was domiciled in the UK and requested further information so that the tax it considered due could be calculated. Further information was not forthcoming and Mr Embiricos wished to refer the question of domicile to the First-tier Tribunal (FTT) for determination. HMRC did not agree to a referral and subsequently issued an information notice to Mr Embiricos under paragraph 1, Schedule 36, Finance Act 2008. Mr Embiricos appealed that notice and applied to the FTT for a direction that HMRC issue a partial closure notice (PCN) under section 28A, TMA, so that he could appeal against the decision concerning his domicile status, without having to provide information about his unremitted foreign income and gains (it was common ground that he had such income and gains). HMRC's view was that it could not issue a PCN until it was able to quantify the tax which would be due if the remittance basis did not apply. 

The FTT granted Mr Embiricos' application, but the Upper Tribunal (UT) reversed that decision. Mr Embiricos appealed to the Court of Appeal.

Court of Appeal judgment

Giving the unanimous judgment of the Court, Simler LJ upheld the conclusion of the UT. 

The Court concluded that HMRC does not have the power to issue a PCN without specifying the additional tax due as a consequence of the conclusions of its enquiries. Without the information HMRC had requested, it was not in a position to be able to make such an assessment.

In the view of the Court, the legislative framework relating to closure notices draws no distinction between a PCN and a final closure notice (FCN). PCNs therefore work in the same way as FCNs and are subject to the same restrictions. 

Both PCNs and FCNs have to state either that no amendment of the return is required or make amendments to the return required to give effect to HMRC’s conclusions. In the present case, it was this second requirement which would apply as HMRC had concluded that Mr Embiricos was UK domiciled. An amendment that simply removed the unquantified remittance basis claim would not comply with this requirement. In order to satisfy this requirement, a PCN has to amend the return to bring into charge the relevant foreign income and gains. The Court said that where the conclusion on the validity of the matter enquired into has computational consequences for the tax return and self-assessment contained within it, the PCN must give effect to the conclusion by amending the taxpayer’s self-assessment. In the instant case, by bringing the income and gains into charge and assessing the tax payable as a consequence of doing so.


In this case, Mr Embiricos had sought to avoid, or at least delay, providing HMRC with information regarding his non-UK income and gains by seeking to compel HMRC to issue a PCN on the issue of his domicile status, against which he could then appeal. The decision will be very disappointing to those taxpayers in a similar position to Mr Embiricos who wish to have the issue of their domicile status determined before being required to go to the trouble and expense of providing further information to HMRC in relation to their claim to the remittance basis of taxation. 

When an enquiry is in progress under section 9A, TMA, a taxpayer can of course ask HMRC to agree that an issue, such as their domicile status, should be referred to the FTT for determination under section 28ZA(1), TMA. However, any such referral requires the agreement of HMRC and, in practice, HMRC is generally reluctant to agree to such a referral.  It is clear that in circumstances such as the present case, consent from HMRC will not be forthcoming.

Many practitioners are of the view that a PCN should be available in Mr Embiricos' circumstances and it will be interesting to see if he seeks to appeal the decision to the Supreme Court.

The judgment can be viewed here.

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