This was a decision on a “knock-out” point about whether discovery assessments were invalidated by the level of assumed disclosure given to HMRC by the appellants in relation to their use of SDLT avoidance schemes.

The FTT held that while the information provided might have prompted the opening of an enquiry, it was insufficient to alert the hypothetical officer to insufficiency or loss of tax so that HMRC’s discovery assessments were allowed under paragraph 30(3) Schedule 10 FA 2003.

The decision is interesting for what it says about HMRC’s reliance on legal privilege to avoid disclosing to the FTT the legal advice taken in 2007 that might have shed light on HMRC’s level of awareness about a loss of tax prior to the issue of the discovery assessments in question. See [44] – [47]  and also [25] – [29] of the decision. In particular, rule 16(3) of the FTT rules of procedure prevents the FTT from forcing disclosure of legally privileged information.

You can read the full decision here

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