Tinkler - Notice of enquiry invalid

19 September 2019

In Tinkler v HMRC [2019] EWCA Civ 1392, the Court of Appeal has allowed the taxpayer's appeal and held that HMRC's notice of enquiry under section 9A, Taxes Management Act 1970 (TMA), was invalid.


In January 2005, William Andrew Tinkler (the taxpayer) signed an engagement letter with BDO (the accountants), appointing the firm as his "tax agent and adviser". The accountants sent the taxpayer's completed Form 64-8 to HMRC in the usual way, thereby authorising HMRC to communicate with it in certain circumstances (as defined within the Form 64-8) regarding its client's tax affairs. 

During the following six months, the taxpayer's address was changed on HMRC's system to an address where he no longer resided. The change was not made following notification from, or discussion with, the taxpayer or anyone on his behalf. HMRC wrote to the taxpayer at his old address, purporting to inform him that it intended enquiring into the tax return he had submitted for the tax year 2003/4. 

The letter was headed as a notice under section 9A, TMA, and stated that a copy of the letter would be sent to his accountants. The letter was delivered to the taxpayer's old address, but he never received it because it was not forwarded on to his new address. HMRC duly wrote to the accountants enclosing a copy of the notice for its information. The accountants proceeded on the basis that a valid enquiry had been opened.

HMRC subsequently issued a closure notice under section 28A, TMA, disallowing a loss which the taxpayer had claimed in his return.

The taxpayer appealed against the closure notice on the basis that it was invalid because he had not been given a valid notice of enquiry.

The First-tier Tribunal and the Upper Tribunal dismissed the taxpayer's appeal and he appealed to the Court of Appeal.

Court of Appeal judgment

The appeal was allowed.

The issues to be determined in the appeal were: 

1. whether valid notice of a section 9A enquiry was given by the copy notice sent to the accountants; and

2. if not, whether the taxpayer was estopped by convention from denying that HMRC had opened a valid enquiry.

Issue 1

The taxpayer disputed that a valid notice was given on three grounds:

1) The accountants did not have actual or apparent authority to receive a notice of enquiry on his behalf.

2) Even if the accountants had such authority, notice under section 9A must be given to the “taxpayer” and cannot be given to an authorised agent, absent an express agreement with HMRC.

3) Even if notice could be given to an authorised agent, notice was not validly given as the copy notice provided to the accountants for information purposes did not purport to be and was not a section 9A notice.

The Court held that a valid notice of enquiry was not given by the copy notice sent to the accountants. The Form 64-8 did not give the accountants authority to receive a notice of enquiry on the taxpayer's behalf because it referred to a webpage that stated that formal notices of enquiry must be sent to the taxpayer. The Court said, at [42]:

"In my judgment this is a clearly expressed limitation on the general authority being sought by HMRC and the corresponding represented authority of the agent. This is, moreover, a matter of deliberate decision in the light of the agreement made between HMRC and professional bodies."

The Court went on to say, at [43]:

"It is also understandable that there should be such a limitation. The giving of a notice of enquiry is an important step with serious and immediate consequences. The tax return can no longer be amended and the taxpayer’s liability for the year in question will not be settled until the enquiry is closed which may, as in this case, take years. It is also a notice which has to be given within a specified time limit. It is therefore unsurprising that HMRC should refer to it as a “formal notice of enquiry” and treat it differently to other forms and pursuant to a specific regime agreed with professional bodies."

The Court also noted that HMRC did not in any event rely on it having that authority, as a purported notice was sent to the taxpayer and the accountants received a copy for information purposes only. 

Issue 2

With regard to issue 2, the Court held that the taxpayer was not estopped by convention from denying that HMRC had opened a valid enquiry. The Court referred to Chitty on Contracts (32nd edition) which summarises the position, at 4-108, as follows:

"Estoppel by convention may arise where both parties to a transaction act on assumed state of facts or law, the assumption being either shared by both or made by one and acquiesced in by the other. The parties are then precluded from denying the truth of that assumption, if it would be unjust or unconscionable (typically because the party claiming the benefit has been materially influenced by the common assumption) to allow them (or one of them) to go back on it."

The conditions for estoppel, as set out in HMRC v Benchdollar Limited and Others [2009] EWHC 1310 (Ch) (and qualified in Blindley Heath Investments Ltd & Anor v Bass [2015] EWCA Civ 1023), are as follows:

1. It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. The assumption must be shown to have crossed the line in a manner sufficient to manifest an assent to the assumption. 

2. The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely on it. 

3. The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter. 

4. That reliance must have occurred in connection with some subsequent mutual dealing between the parties. 

5. Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position.

The Court concluded that on the facts of the case, the conditions for estoppel were not satisfied. In particular, there had been no expression of a common assumption by the accountants, such that the taxpayer assumed some element of responsibility. 

In the view of the Court, any shared mistaken assumption was induced by HMRC's misrepresentation in the copy notice (i.e. that a valid section 9A notice had been sent to the taxpayer). The accountants had no reason to doubt the accuracy of that misrepresentation and had therefore proceeded on that basis. At no stage did the accountants endorse, affirm or address the truth or accuracy of what was said in the copy notice or do anything to demonstrate that the assumption reflected its own understanding. In concluding that the requisite unconscionability was not made out, the Court said at [69]:

"This is a case in which HMRC have only themselves to blame for what occurred. They were at fault in sending the notice of enquiry to the wrong address. They misled BDO into assuming that an enquiry had been validly opened. BDO did nothing to cause the adoption of the mistaken assumption. In all the circumstances of the present case, any acquiescence by BDO in HMRC’s mistaken assumption is insufficient to found unconscionability."


This case is an important decision and confirms that HMRC must observe the formal requirements of the TMA when it wishes to open an enquiry. Unless a taxpayer receives a formal notice of enquiry indicating that HMRC is commencing an enquiry into its return, no valid enquiry will have been opened. 

HMRC were unable to persuade the Court that Form 64-8 gave it authority to send a notice of enquiry to the taxpayer's agent. That form expressly excluded section 9A notices as a document which HMRC can send to a taxpayer's agent only.  

The Court also rejected HMRC's appeal against the issue of estoppel by convention. The Court concluded that as HMRC was itself to blame for failing to follow the correct procedure, it could not rely on grounds of unconscionability in raising the defense. 

The decision will no doubt lead to careful consideration by taxpayers of whether HMRC has indeed opened a valid enquiry into their return.  

The judgment can be viewed here.

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