Judgment summary
This is an appeal against a decision of the First-tier Tribunal (FTT) in Richard Warner v HMRC [2023] UKFTT 751 (TC), which struck out Mr Warner's proceedings on the basis that the FTT had no jurisdiction because HMRC had made no appealable decision (1).
The FTT refused permission to appeal, as did the Upper Tribunal initially, but permission was later granted on two grounds concerning whether Mr Warner's letter could be treated as a claim for overpayment relief, and whether he qualified for such relief under paragraphs 34 and 34A(4) of Schedule 10 Finance Act 2003 (2).
The Upper Tribunal (Judge Kevin Poole and Judge Ashley Greenbank) dismissed the appeal, finding no error of law in the FTT's conclusion that a claim for multiple dwellings relief (MDR) is not a claim for overpayment relief, and that Mr Warner had not made a valid overpayment relief claim (48, 69).
Background
Mr Warner acquired two adjacent plots of land in the Isle of Wight on 25 May 2016 (10(1)). On 1 and 6 June 2016 he submitted land transaction returns (SDLT1) for the two properties, identifying them as non-residential property, with no claim for multiple dwellings relief (MDR) included; SDLT of £58,500 and £110,000 was self-assessed, totalling £168,500 (10(2)).
On 3 July 2018, Mr Warner wrote to HMRC requesting recalculation of SDLT on the basis he had been unaware he could claim MDR, submitting this would reduce SDLT to £41,300 (10(3)). On 19 July 2018, HMRC replied refusing the request in two letters, one for each land transaction return (10(4)).
On 12 August 2019, Mr Warner wrote again citing ill-health and requesting leniency, including reference to outstanding bankruptcy proceedings pursued by HMRC (10(5)). On 17 October 2019, HMRC replied maintaining rejection, stating any request for MDR was time barred under section 58D(2) (10(6)).
On 1 November 2019, Mr Warner stated he wished to appeal and intended to refer the matter to the First-tier Tribunal (10(7)). He notified the appeal to the Tribunal on 31 March 2022 (10(8)). The case was allocated to the basic track on 28 July 2022 (10(9)). HMRC applied to strike out the appeal on 8 September 2022 (10(10)), and Mr Warner submitted representations against strike out on 9 December 2022 (10(11)). None of the SDLT set out in the returns has been paid to HMRC (10(12)).
The FTT struck out the appeal on the basis that no appealable decision had been made by HMRC under paragraph 35 of Schedule 10 FA03, that no enquiry had been opened into the SDLT returns, that the proviso 'except as otherwise provided' in paragraph 6(3) of Schedule 10 did not extend the amendment time limit, and that overpayment relief under paragraph 34 of Schedule 10 was not relevant because a claim for MDR is not a claim for overpayment relief (8, 9, 10, 11).
Core dispute
The appeal concerned whether the FTT erred in concluding that Mr Warner could not make a valid claim to overpayment relief based on entitlement to MDR, and whether the FTT erred in concluding that Mr Warner did not qualify for overpayment relief pursuant to paragraphs 34 and 34A(4) of Schedule 10 Finance Act 2003 (22).
HMRC argued the FTT's unappealed finding that no enquiry had been opened into the SDLT returns was determinative of the whole appeal regardless of the overpayment relief grounds (26, 28). This preliminary argument was rejected because the FTT's finding on enquiry was addressed only to the MDR claim under the returns, not to any potential overpayment relief claim (29).
On the substantive grounds, the parties disputed whether Mr Warner's letter of 3 July 2018 constituted, in substance, a valid claim for overpayment relief under paragraph 34 of Schedule 10 despite being framed as an attempt to amend his land transaction returns to claim MDR directly (35-44). The parties also disputed whether, if such a claim had been made, HMRC would have been entitled to refuse it under Case A or Case C of paragraph 34A(4) of Schedule 10 (51-66).
Court findings
The Upper Tribunal rejected HMRC's preliminary submission that the FTT's unappealed finding of 'no enquiry opened' was determinative of the whole appeal, since that finding related only to the SDLT returns and MDR claim, not to any overpayment relief claim (29).
On Ground 1, the Tribunal found that Mr Warner's letter of 3 July 2018 was, on its natural reading, an attempt to claim MDR by amending his land transaction returns, and was neither intended by him nor understood by HMRC as a claim for overpayment relief under paragraph 34 of Schedule 10 (43-44). The Tribunal held that a document neither intended nor understood as an overpayment relief claim cannot be treated as one merely because it seeks discharge of tax believed to be over-assessed (45-46). Human Rights Act and A1P1 arguments did not assist Mr Warner (47). The FTT was correct that 'a claim for MDR is not a claim for overpayment relief' (48).
Because no valid overpayment relief claim was found to exist, HMRC could not have opened an enquiry into or issued a closure notice in respect of such a claim, so no right of appeal arose under paragraph 14 of Schedule 11A and the FTT was correct to find it had no jurisdiction (49, 69).
On Ground 2, considered obiter given the finding on Ground 1, the Tribunal held that the FTT erred in law in finding that HMRC would have been entitled to refuse an overpayment relief claim under Case C of paragraph 34A, because this required supporting findings of fact which were absent from the FTT Decision (57, 70(i)). However, the Tribunal agreed with HMRC that any such claim would in any event fall within Case A of paragraph 34A, since the failure to claim MDR constituted a 'mistake' within the meaning explored by the Upper Tribunal in L-L-O Contracting Ltd v HMRC, and there was no residual discretion for HMRC to allow the claim outside the statutory scheme (62-66, 70(ii)).
The Tribunal declined to determine, as a matter requiring further factual findings, whether HMRC had given notice of enquiry into any assumed overpayment relief claim or issued a valid closure notice, since this question became irrelevant given the finding that no valid claim had been made (67).
Outcome
The Upper Tribunal dismissed Mr Warner's appeal, upholding the FTT's decision to strike out the proceedings for lack of jurisdiction (69).
The Tribunal found no error of law in the FTT's conclusion that Mr Warner had not made a valid overpayment relief claim, and therefore no appealable decision or right of appeal had arisen under paragraph 14 of Schedule 11A Finance Act 2003 (69).
While the Tribunal agreed the FTT had erred in law regarding the applicability of Case C of paragraph 34A without supporting findings of fact, it concluded this was not relevant to the outcome, since any overpayment relief claim would in any event have failed under Case A of paragraph 34A (70).
Major issues / areas of contention
- Whether HMRC had opened an enquiry into Mr Warner's land transaction returns or any overpayment relief claim, giving rise to an appealable decision
- Whether the proviso 'except as otherwise provided' in paragraph 6(3) of Schedule 10 Finance Act 2003 extended the 12-month time limit for amending a land transaction return to claim multiple dwellings relief
- Whether Mr Warner's letter of 3 July 2018 could be treated as a valid claim for overpayment relief under paragraph 34 of Schedule 10, despite being framed as an attempt to amend the land transaction returns to claim MDR
- Whether, if a valid overpayment relief claim existed, HMRC would have been entitled to refuse it under Case A (mistake in or failure to make a claim) or Case C (claimant knew or ought to have known relief was available within the time limit) of paragraph 34A(4) of Schedule 10
- Whether section 3 of the Human Rights Act 1998 and Article 1 of the First Protocol assisted Mr Warner's construction of paragraphs 34 and 34A of Schedule 10