Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) reconsidering, at an oral hearing, an application by Mr Ketan Patel for permission to appeal against a First-tier Tribunal decision dated 5 September 2025. That FTT decision had refused Mr Patel's appeal against discovery assessments and closure notice amendments issued by HMRC.
Judge Anne Redston had initially considered the permission to appeal application on the papers on 8 March 2026, granting permission on Grounds 3 and 5, and limited permission on Grounds 4 and 6. Mr Patel's solicitors then applied for reconsideration at an oral hearing, which took place on 8 July 2026, with new grounds (7, 8 and 9) admitted with HMRC's agreement.
During the hearing, HMRC clarified that the FTT's decision had dealt with amounts of assessable income rather than amounts of tax, contrary to the parties' prior understanding that the FTT had increased Mr Patel's tax liability by almost £1m for later years while reducing it for earlier years. This clarification led the Tribunal to amend Ground 3 and to grant permission on further grounds concerning the FTT's reliance on the wrong statutory provision and procedural fairness.
The Tribunal ultimately gave permission to appeal on Grounds 2, 3 (as amended), 5, 7, 8 and 9, refused permission on Grounds 1 and 6, and found that Ground 4 fell away as encompassed within the other permitted grounds.
Background
HMRC opened an enquiry into BTB Brew Technology UK Ltd in August 2011 and established that Mr Patel had received sums from BTB [14]. HMRC issued discovery assessments for 2009-10, 2010-11 and 2012-13 on 17 July 2015 on the basis that Mr Patel had been self-employed in relation to his work for BTB, with the first two years based on the presumption of continuity [15]. Further discovery assessments for 2016-17 to 2018-19 were issued on 16 October 2020, with the last two years also based on the presumption of continuity [16]. Closure notices for 2011-12 and 2013-14 to 2015-16 were issued on 28 July 2021 [17].
Mr Patel appealed to the FTT. He acted as a litigant in person at the FTT and in his initial application to appeal. Disputes arose over the FTT Bundle, including HMRC's refusal to include documents Mr Patel had uploaded late, and Mr Patel's repeated requests for copies of bank statements, which HMRC did not provide before the hearing [18]-[22].
The FTT hearing began on 14 October 2024, listed for four days but concluding after two, followed by directions for HMRC to file an excel spreadsheet and closing submissions (421 paragraphs over 44 pages), and for Mr Patel to respond in writing [23]-[28]. The Decision was issued on 5 September 2025, some nine months later, with the delay attributed to 'medical issues' though it had been 'substantially written in early 2025' [29].
The parties, including Mr Patel, his solicitors and Mr Brodsky, understood the Decision to have increased Mr Patel's tax for 2012-13 through to 2018-19 by almost £1m while reducing tax for the early years [36]. However, at the oral hearing before the Upper Tribunal, HMRC's counsel clarified that the FTT's figures related to assessable income and not tax, meaning the FTT had in fact reduced the figures across all years [37].
Core dispute
The dispute concerned whether Mr Patel should be given permission to appeal against the FTT's Decision refusing his appeal against discovery assessments and closure notices. Nine grounds of appeal were ultimately considered, covering matters including the validity of HMRC's discovery assessments and closure notices, the FTT's application of the burden of proof where HMRC sought to change assessment amounts, the FTT's treatment of Mr Patel's employment status, the use of the presumption of continuity, alleged inconsistent treatment of evidence as between Mr Patel and HMRC, confusion in the Decision between tax assessed and income chargeable, and procedural fairness issues arising from the FTT directing written submissions rather than an oral hearing and from Mr Patel not having received the underlying bank statements.
Court findings
On Ground 1 (discovery), the Tribunal found that Officer Jones had examined bank statements and other evidence for several years and reasonably believed there was an insufficiency of tax [40]-[44]; her use of the presumption of continuity for later years did not undermine the reasonableness of her belief, and correspondence showed HMRC had given Mr Patel opportunities to provide further evidence before assessing [41]. Permission was refused on this Ground.
On Ground 2 (validity of closure notices/enquiries), the Tribunal found the Ground arguable, noting Mr Patel's FTT skeleton had raised the validity of assessments and discovery under s29 TMA 1970 [46]-[47]. Permission was granted.
On Ground 3 (burden of proof), the Tribunal found it arguable that the FTT had erred in its approach to the burden of proof where HMRC sought to change assessment amounts, referencing Stirling Jewellers v HMRC [2020] UKUT 245 (TCC), and amended the wording of the Ground in light of HMRC's clarification during the hearing [48]-[51]. Permission was granted as amended.
On Ground 4 (inconsistent evidential treatment), the Tribunal found this Ground was encompassed within Grounds 3, 7, 8 and 9 and so fell away [52]-[55].
On Ground 5 (employment status), permission had already been given on the papers [57].
On Ground 6 (presumption of continuity), the Tribunal found no material error of law in the FTT's use of the term 'principle' rather than 'presumption', and found that any challenge to the FTT's determination of assessments was encompassed in Grounds 3 and 8; permission was refused to the extent it raised a separate challenge [58]-[63].
On Ground 7 (confusion between tax assessed and income chargeable, wrong statutory provision), the Tribunal agreed the Ground was arguable, noting the FTT's citation of TMA s 50 as allowing changes to a tax assessment when HMRC's schedules in fact related to profits [64]-[65]. Permission was granted.
On Ground 8 (failure to hold a hearing for significant parts of the dispute), the Tribunal found it arguable that proceeding by written submissions from a litigant in person, in response to 45 pages of detailed HMRC analysis, engaged Rule 29 read with Rule 2 [66]-[67]. Permission was granted.
On Ground 9 (failure to ensure Mr Patel received bank statement evidence before the Decision), the Tribunal agreed this was arguable [68]-[69]. Permission was granted.
Outcome
The Upper Tribunal gave permission to appeal on Grounds 2, 3 (as amended), 5, 7, 8 and 9. Permission to appeal was refused on Grounds 1 and 6. Ground 4 was found to fall away as being encompassed within Grounds 3, 7, 8 and 9 [9]-[10].
Major issues / areas of contention
- Whether HMRC's discovery assessments were validly made on the basis of a reasonable belief in an insufficiency of tax, including where the presumption of continuity was used
- Whether the FTT failed to make findings on the validity of the enquiries or closure notices
- Whether the FTT erred in its application of the burden of proof where HMRC sought to change the amounts of assessments and closure notices
- Whether the FTT confused the amount of tax assessed with the amount of income chargeable, and relied on the wrong statutory provision under TMA s 50
- Whether the FTT adopted an inconsistent approach to evaluating evidence from Mr Patel compared with evidence from HMRC
- Whether the FTT's analysis of Mr Patel's employment status was legally flawed
- Whether the FTT's application of the presumption of continuity, including the choice of base years, was adequately reasoned
- Whether it was an error of law for the FTT to direct written submissions rather than hold a further oral hearing given the volume and complexity of HMRC's submissions and Mr Patel's status as a litigant in person
- Whether the FTT erred by issuing its Decision without first ensuring Mr Patel had received and had time to consider the bank statement evidence underlying HMRC's calculations