Judgment summary
The Appellant, Eillish Kwai, appealed against five discovery assessments issued under section 29 of the Taxes Management Act 1970 (TMA), all dated 16 October 2024, and one closure notice also dated 16 October 2024, issued under section 28A(1B) and (2) TMA. These amended her self-assessment tax returns for 2018/19 to 2023/24 inclusive by adjusting travel expenses claimed [1].
The amounts were £2,195.00 for 2018/19, £2,795.00 for 2019/20, £4,395.00 for 2020/21, £2,795.20 for 2021/22, £5,740.20 for 2022/23 and £7,924.05 for 2023/24 [1].
The Tribunal issued a Decision Notice on 30 April 2026 summarising its decision to dismiss the appeal. The Appellant requested full facts and reasons with a view to seeking permission to appeal to the Upper Tribunal [2].
The Tribunal dismissed the appeal. The discovery assessments for 2018-19 to 2022-23 and the closure notice for 2023-24, as varied by HMRC on review, stood good [3, 47, 48].
Background
During the relevant years the Appellant was employed by the construction business Ardmore in a role described as Community Manager or Community Liaison Manager. Her work required her to attend multiple construction sites and related meetings within London, and the sites changed over time as projects were completed and new projects commenced [14(1)].
The Appellant lived in Colchester, having moved there in late 2015, so her residence was outside London throughout the relevant period [14(2)]. She used her own vehicle for at least some work-related journeys, and her employer paid her a car allowance of £300 per month, taxed through PAYE [14(3)].
She claimed substantial sums for employment expenses, principally mileage: £17,000 for 2018-19, £20,000 for 2019-20, £28,000 (or £28,312 on one version) for 2020-21, £20,000 for 2021-22, £24,000 for 2022-23 and £21,000 for 2023-24 [14(4)]. She amended some returns repeatedly, with the 2023-24 return amended seven times and the 2021-22 return amended eight times [14(5)]. She did not keep contemporaneous mileage logs or equivalent records and accepted this in her exchanges with HMRC [14(6)].
On 6 August 2024, HMRC officer Mr Kenneth Daniels opened an enquiry into the 2023-24 return. On 14 August 2024 he notified the Appellant that he intended to extend the enquiry to the previous five returns back to 2018-19 [4]. He issued the closure notice and discovery assessments on 16 October 2024 [5]. Following the Appellant's appeal, a review was carried out and the Review Conclusion letter of 5 February 2025 varied the calculations slightly but otherwise left the closure notice and discovery assessments standing good [6, 11].
Core dispute
The dispute concerned whether the Appellant's travel expenses were deductible under sections 337 to 339 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), whether HMRC made a valid discovery under section 29 TMA in relation to the earlier years, and whether the assessments were made within the applicable time limits [1, 26, 27 to 32].
The Appellant submitted that she had no permanent workplace, that she was site-based and travelled to temporary workplaces, so travel from home was deductible. She relied on advice she said she received from HMRC officer Mr Jim Wicks at a meeting in Colchester Town Hall in 2016, and complained that HMRC should have identified any problem much earlier [29, 30, 32].
HMRC submitted that the Appellant's duties were performed throughout London and defined by reference to an area, so London was a permanent workplace under section 339(8) ITEPA and travel from Colchester to London was ordinary commuting. HMRC accepted that intra-London travel could be deductible and said their revised figures already gave generous credit for it. HMRC also submitted that the discovery revealed excessive claims made carelessly, so the six-year time limit under section 36 TMA applied [28, 31, 32].
Court findings
The Tribunal was satisfied that the enquiry into the 2023-24 return was validly opened and that the closure notice of 16 October 2024 validly ended it, with no failure to comply with sections 9A or 28A TMA [33].
The Tribunal found that HMRC made a valid discovery under section 29 TMA in relation to the earlier years. The enquiry revealed that the Appellant had no contemporaneous mileage records, regarded Colchester to London travel as deductible, had made substantial claims over several years using broadly the same methodology, and had claimed amounts that could not be reconciled with reliable evidence. Mr Daniels genuinely formed the belief that insufficiencies of tax existed and, viewed objectively, a reasonable officer could hold that belief, so the requirements in Anderson v HMRC were met [34].
The Tribunal found that the insufficiency in earlier years was brought about by the Appellant's careless behaviour. She claimed large deductions year after year without sufficient records, increased amounts on amendment without any reliable methodology, and did not include any statement that the mileage figures were estimates or other information sufficient to alert a reasonable officer to deficiencies [24, 35]. It followed that HMRC was entitled to rely on the six-year time limit in section 36 TMA, so the discovery assessments were made in time [37].
On the travel issue, the Tribunal found that the Appellant's role was not tied to a single site but required attendance at a succession of projects and meetings across London. Under section 339(8) ITEPA, her duties were defined by reference to an area, and she had a permanent workplace consisting of London, taken to be within the perimeter of the M25. Travel from Colchester to the London area was therefore ordinary commuting and not deductible [38 to 41].
The Tribunal accepted that the Appellant undertook genuine business travel within London and was entitled to some relief, which HMRC allowed. However, the burden rested on the Appellant to show the closure notice and discovery assessments were excessive, and she produced no reliable mileage records and no sufficiently persuasive alternative computation. The Tribunal saw no proper basis for departing from HMRC's revised figures, which already made allowance for intra-London travel [42 to 44].
On the 2016 meeting, the Tribunal found as fact that the Appellant met Mr Wicks at Colchester Town Hall on 4 February 2016 and that he completed her 2014-15 return with her [14(13)]. It was not able to find that Mr Wicks advised her that she could claim mileage from Colchester to London sites [14(14)]. Even if such advice had been given, it could not override the statutory rules and would not have relieved her of the obligation to keep records and file correct returns [36, 45].
The Tribunal criticised HMRC for failing to include the notes of the meeting and copies of the Appellant's returns in the hearing bundle, describing these as serious omissions and oversights [13, 19, 21]. It found some oral evidence from both Mr Daniels and the Appellant to be less than satisfactory but did not conclude that either witness was deliberately attempting to mislead, attributing the difficulties to inadequate preparation, imperfect recollection and confusion [15, 25].
Outcome
The Tribunal dismissed the appeal. The Appellant had not shown that the closure notice for 2023-24 was excessive, and HMRC had shown that the discovery assessments for 2018-19 to 2022-23 were validly made and in time, which the Appellant had not shown to be excessive [47].
The closure notice and the discovery assessments, as varied on review, stood good, and the Appellant was required to pay additional tax in the amounts calculated by HMRC, totalling £25,844.45 [48].
Major issues / areas of contention
- Whether travel expenses claimed by the Appellant were deductible under sections 337 to 339 ITEPA.
- Whether the Appellant had a permanent workplace consisting of London as an area under section 339(8) ITEPA, making home to London travel ordinary commuting.
- Whether HMRC made a valid discovery under section 29 TMA in relation to the earlier tax years.
- Whether the insufficiency of tax was brought about carelessly so that the six-year time limit in section 36 TMA applied.
- Whether the enquiry and closure notice for 2023-24 were validly made under sections 9A and 28A TMA.
- Whether alleged advice given by an HMRC officer in 2016 affected the Appellant's liability or her obligation to keep records.
- Whether the Appellant discharged the burden of showing the assessments and closure notice were excessive.