Judgment summary
This is an Upper Tribunal decision on a renewed application by Michael Nielson for permission to appeal against a First-tier Tribunal (Tax Chamber) decision released on 17 July 2025 (TC/2022/02543). The FTT had previously refused permission to appeal on 9 October 2025, and the Upper Tribunal had refused permission on the papers before Mr Nielson requested reconsideration at an oral hearing held on 30 April 2026 (1-4).
The underlying FTT dispute concerned whether Mr Nielson had successfully amended his self-assessment tax return for 2007/2008 using a Corrective Action Form issued in the context of a Follower Notice and Accelerated Payment Notice under Part 4 of the Finance Act 2014, following his participation in a tax avoidance scheme (7, 8, 9).
The Upper Tribunal considered five grounds of appeal raised in Mr Nielson's written application, together with further oral submissions, and refused permission on all grounds (72).
Background
Mr Nielson had entered into a tax avoidance scheme, leading HMRC to issue him with an Accelerated Payment Notice and a Follower Notice under Part 4 of the Finance Act 2014 (8). A Follower Notice informs a taxpayer how to take corrective action to counter the tax advantage sought from the scheme, and section 208 FA 2014 allows amendment of a return outside the ordinary statutory time limit for that purpose (9).
Rather than making an amendment to counter the tax advantage, Mr Nielson used the Corrective Action Form to seek to re-categorise £1,000,000 described in his return as "other income" as a gift, which in his view rendered it non-taxable (10, FTT [15]).
HMRC issued a Closure Notice stating that no timely claim to re-categorise the £1,000,000 as a gift had been made, and that HMRC held evidence showing the amount was taxable (11, FTT [29]). HMRC contended that the Corrective Action Form could only be used to amendments necessary to counteract the tax advantage from the scheme, and that the Closure Notice contained no appealable decision (12, FTT [9]).
Core dispute
The FTT proceedings concerned whether Mr Nielson's attempt to amend his 2007/2008 return via the Corrective Action Form had succeeded, and whether HMRC's Closure Notice contained an appealable decision (7, 15). The FTT found that the Corrective Action Form only permitted amendment to the extent necessary to counter the identified tax advantage, and that Mr Nielson's amendment therefore failed (FTT [26]). It also found that the Closure Notice contained no appealable decision, and that consideration of the underlying treatment of the £1,000,000 was outside its jurisdiction (FTT [36], [37], [49]).
Before the Upper Tribunal, Mr Nielson advanced five grounds of appeal: (1) a general assertion that his grounds of appeal were not properly raised or debated at the FTT hearing; (2) that the short length of the FTT hearing (under 90 minutes against a scheduled three days) showed his grounds were not properly considered; (3) that the FTT relied on an incorrect application of facts, including a disputed signature and allegedly inadmissible evidence underlying the Closure Notice; (4) that the FTT's conclusion on the taxability of the £1,000,000 could not be founded on a "subjective view" given his third party evidence; and (5) that the FTT Judge, having decided the substantive appeal, could not impartially consider the permission to appeal application (19-52).
At the oral hearing Mr Nielson reiterated these points and added submissions concerning the historical context of discussions with HMRC preceding the Corrective Action Form, prejudice from HMRC being permitted to raise new arguments shortly before the hearing, and further concerns about the reliability of HMRC's evidence, including reliance on information from advisers described as "TFO Tax" and inconsistencies in an HMRC officer's evidence (58-70).
Court findings
The Upper Tribunal held that permission to appeal to the UT may only be granted on a point of law under section 11(1) Tribunals, Courts and Enforcement Act 2007, and that the applicant must show an arguable error of law with a realistic, not fanciful, prospect of success (5).
On the hearing duration, the Tribunal found this to be a case management matter for the FTT, applying the "plainly wrong" or "unjustifiable" threshold from HMRC v Ingenious Games LLP [2014] UKUT 0062, and concluded no arguable error of law had been shown (26-29).
On the alleged incorrect application of facts and evidence issues, the Tribunal noted the FTT had no jurisdiction to consider the underlying evidence behind the Closure Notice (FTT [34]), and that its later consideration of the £1,000,000 payment's tax treatment was a secondary matter, relevant only if the return amendment had succeeded, which the FTT had found it had not (FTT [73], [75]) (33-41, 70).
On allowing HMRC to introduce new arguments before the hearing, the Tribunal found this was a case management decision, and that the FTT had ensured fairness by allowing Mr Nielson time to make written submissions in response (FTT [11]) (44-46, 64-67).
On the impartiality point regarding the same judge considering the permission to appeal application, the Tribunal referred to Waele Bittar v Secretary of State for the Home Department [2025] UKUT 00277 (IAC), which held that such a practice does not offend procedural fairness or give rise to apparent bias (52-54).
The Tribunal also noted that the FTT's obiter findings on the taxability of the £1,000,000 payment were not material to its overall decision, since the FTT had already concluded there was no appealable decision or successful amendment for it to consider (39, 51, 70).
Outcome
Permission to appeal was refused on all grounds (72). The decision was issued to the parties on 18 May 2026.
Major issues / areas of contention
- Whether the Corrective Action Form under section 208 FA 2014 could be used to make an amendment (recharacterising £1,000,000 as a gift) other than to counteract the tax advantage from the relevant avoidance scheme
- Whether HMRC's Closure Notice contained an appealable decision within the FTT's jurisdiction
- Whether the short duration of the FTT hearing, against a scheduled three-day estimate, indicated that grounds of appeal were not properly considered
- Whether the FTT erred in its factual findings, including reliance on a disputed signature and allegedly inadmissible evidence
- Whether the FTT's obiter conclusion that the £1,000,000 was taxable income rather than a gift was properly reasoned
- Whether allowing HMRC to introduce new arguments shortly before the hearing was procedurally unfair
- Whether it was appropriate for the same FTT judge to determine the application for permission to appeal against her own substantive decision