The value of obtaining legal representation when seeking to challenge decisions made by HM Revenue and Customs (HMRC) was illustrated by a recent case in which the Upper Tribunal (UT) granted a taxpayer permission to appeal against a decision upholding a number of assessments and closure notices.

HMRC had opened an enquiry into a company and established that the taxpayer or entities associated with him had received funds from it. HMRC issued him with discovery assessments in respect of six tax years, on the basis that he had been self-employed in relation to his work for the company. He appealed to the First-tier Tribunal (FTT), acting as a litigant in person.

During the appeal, HMRC requested various amendments to the amounts of the assessments. Having considered the evidence and the submissions made, the FTT found that the assessments in the revised amounts requested by HMRC were reasonable. The FTT refused the taxpayer’s application for permission to appeal.

After obtaining legal representation, the taxpayer applied to the UT for permission to appeal, on different grounds from those which had been refused by the FTT.

The taxpayer argued that the FTT had erred in law in failing to make any findings as to the validity of the enquiries or the closure notices which charged him to tax in respect of four of the tax years. The procedural questions of whether the assessments and the closure notices were valid, and whether HMRC had made a discovery for the purposes of Section 29 of the Taxes Management Act 1970, needed to be addressed by the FTT. The UT found that that ground was arguable and gave permission to appeal.

The UT also gave permission to appeal on the ground that the FTT had erred in its application of the burden of proof where HMRC had sought to change the amounts of the original assessments and/or closure notices. It was also arguable that the FTT had failed to carry out any legal analysis of the taxpayer’s employment status, and that its factual analysis of his employment status was flawed.

The UT agreed that it could be argued that the FTT had failed to make findings about the tax payable and/or had failed to set out conclusions which could be understood by the taxpayer or a reasonable reader of the decision. In particular, the decision had confused the tax assessed with the income chargeable. Permission to appeal was also given on the ground that it had been an error of law for the FTT to make its decision without first ensuring that the taxpayer had received and had time to consider evidence from bank statements on which HMRC had based their calculations.