Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) on the Applicant's request for an oral hearing to reconsider a refusal of permission to appeal against a First-tier Tribunal (Tax Chamber) decision released on 14 January 2026 (the Decision) (1).
The FTT had refused permission to appeal its own Decision on 28 April 2026 (1). Judge Tracey Bowler had already granted permission on one of two grounds on the papers and this hearing, held remotely on 2 September 2026, dealt with the Applicant's request to reconsider refusal on the other ground (2).
The FTT Decision had dismissed the Applicant's appeal against discovery assessments made under s.29 Taxes Management Act 1970 for 2004/05, 2005/06 and 2006/07, and a closure notice for 2009/10, together with related penalty determinations for negligence/carelessness, on the basis that the Applicant was UK tax resident throughout the Relevant Period (5, 6).
The Applicant did not challenge the FTT's findings on residence or carelessness, but challenged the finding that the assessments were validly raised under s.29 TMA (8).
Background
The FTT found that the Applicant was UK tax resident throughout the Relevant Period, that he was careless/negligent in submitting his self-assessment returns, causing a loss of tax, and that the assessments were validly raised under s.29 TMA (7). The Applicant accepted the residence and carelessness findings but disputed the validity of the assessments (8).
Permission to appeal had already been granted on Ground 2, concerning the FTT's approach to the quantum element of the assessments, including an arguable error in its approach to a 'rounding up' of amounts (11). This reconsideration concerned Ground 1 only.
After the oral hearing, the Applicant's tax advisor emailed the Tribunal with further information about the Applicant's business activities that he had been unable to convey at the hearing. The Tribunal did not consider this evidence further, noting that the FTT's underlying findings had not been challenged and that the matters had no impact on the decision (13).
Core dispute
The dispute concerned whether the FTT erred in law in finding that the discovery assessments were validly raised under s.29 TMA (Ground 1), split into two sub-grounds.
Ground 1A asserted that the FTT applied the wrong legal test for the objective element of a discovery assessment. Ground 1B asserted that, even applying the correct test, the FTT's conclusion was not supported by the facts (9, 10).
Both parties relied on Jerome Anderson v HMRC [2018] UKUT 0159 (TC) for the legal test, which comprises a subjective test (that the officer believed the information pointed towards an insufficiency of tax) and an objective test (that the officer's belief was one a reasonable officer could form) (14-18). The Applicant conceded the subjective test was met (17, 22).
Court findings
On Ground 1A, the Tribunal found no basis in law to depart from the tests set out in Anderson, which had been endorsed by the Supreme Court in HMRC v Tooth [2019] EWCA Civ 826 at paragraph 72 (21). The FTT had correctly set out the subjective test at [220-221] of the Decision and had properly applied the objective test, as shown at [219], [222] and [226] (23). The Tribunal concluded that Ground 1A did not identify an arguable error of law (24).
On Ground 1B, the Tribunal considered this to be, in essence, a disagreement with the FTT's conclusion on the facts rather than an identification of legal error (25). Of the sixteen factors identified by the FTT, counsel for the Applicant accepted that nearly all were neutral or pointed towards continued UK residence, including the Applicant's wife remaining in the UK, available UK accommodation, his role as a director of UK-run companies, the profitability and activity of those companies in the UK property market, his sale of UK properties, his description as a UK property developer, and his periodic visits to the UK (26).
The Tribunal held that the FTT had correctly applied the law to these facts at [225-226] of the Decision, finding that the information, taken together, could reasonably lead a reasonable officer to conclude there was much more than a suspicion of an insufficiency of tax, even though no single factor proved residence (27, 28).
The Tribunal rejected the argument that no discovery had been made because the officer had only identified a 'risk' in November 2009 before issuing assessments on 26 March 2010, noting that further information had been obtained after that point and that, per Tooth, a discovery need not depend on a new fact but may arise from a newly formed view (29). It also rejected reliance on HMRC's own experts' evidence, finding that this evidence addressed only the officer's subjective state of mind, a point already conceded at the FTT hearing and not challenged (30).
The Tribunal concluded that Ground 1B did not identify an error of law, and that the FTT's conclusions were rational, reasonable and not perverse (31).
Outcome
Permission to appeal on Ground 1 (encompassing both Ground 1A and Ground 1B) was refused (32).
Permission to appeal on Ground 2, concerning the FTT's approach to the quantum of the assessments, had already been granted and was confirmed (32).
Major issues / areas of contention
- Whether the FTT applied the correct legal test for the objective element of a discovery assessment under s.29 TMA 1970, as set out in Jerome Anderson v HMRC.
- Whether the FTT's application of that test to the sixteen factors it identified was supported by the facts or amounted to an irrational conclusion.
- Whether a discovery assessment can be valid where the officer initially identified only a 'risk' of continued UK residence, in light of HMRC v Tooth.
- Whether HMRC's expert evidence on the officer's state of mind undermined the finding that the objective test was met.
- Whether the FTT erred in its approach to the quantum of the assessments, including a 'rounding up' of amounts (Ground 2, permission already granted).