David Howell v Commissioners for Her Majesty's Revenue and Customs
Decision date: 16 March 2011
Neutral citation: [2011] UKFTT 179 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether HMRC validly raised discovery assessments under s.29 TMA 1970 after a Tomlin settlement paid the appellant £55,000 on his exit from a partnership. The First-tier Tribunal held there was no "discovery" for the years 1996/97–2003/04 because the partnership and self-assessment returns had been complete and accurate, and the s.29(4)/(5) conditions were not met. Alternatively, the tribunal found the £55,000 was a capital sum payable in 2006/07 for transfer of the partner's share. The discovery assessments for 1996/97–2003/04 were therefore invalid and no further tax was due for 2006/07.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
A valid "discovery" under s.29 TMA 1970 requires new information as to the particular taxpayer and tax year; complete and accurate partnership and individual returns will ordinarily defeat a s.29 discovery, and a subsequent post-cessation settlement cannot be used to found discovery assessments for earlier years absent the specific conditions in s.29(4) or s.29(5).
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The tribunal suggested (obiter) that where a Tomlin schedule and claim particulars record entitlement to capital-account balances, that factual context supports treating such settlement proceeds as capital rather than income; it also noted that obtaining relief for errors in partnership returns generally requires agreement by the persons carrying on the trade rather than unilateral action.