The Upper Tribunal (UT) has held in Bristol & West plc v HMRC3 that closure notices that HMRC had mistakenly sent to a taxpayer were valid and could not therefore be amended. Although the  taxpayer was unsuccessful in relation to the other substantive issues in its appeal, as valid  closure notices had been issued, HMRC was unable to collect the relevant tax that would have  otherwise been due.


Paragraph 32(1), Schedule 18, Finance Act 1998, provides:

“An enquiry is completed when [HMRC] by notice (a “closure notice”) informs the company they have  completed their enquiry and state their conclusions. The notice takes effect when it is issued.”

There is no prescribed form for the issue of closure notices.


On 30 October 2007, or the day before, Mr Howard, the HMRC officer with conduct of the enquiry,  placed a document on the desk of a colleague who was responsible for arranging for the issue of  closure notices and amendments to returns. These (incorrect) instructions, to issue closure notices  to Bristol & West plc (the taxpayer), were dutifully inputted into an HMRC computer, creating a  file within HMRC’s COTAX system. This would ultimately lead to the printing of the closure notices  and their insertion into envelopes.

On 30 October 2007, Mr Howard realised the error and attempted to rectify the incorrect  instruction. Unable to do so he “somewhat desperately” attempted to change the taxpayer’s address  to that of HMRC, so that the closure notices would be sent out, and then come straight back to  HMRC. He was initially unable to satisfy himself whether this attempt was successful. At 7am the following morning, he arrived at his office and was able to ascertain that the address  had not been changed.

It was impossible to say exactly when the closure notices would have been printed, however they  would not have been collected for posting (by second class post) until 1 November 2007. This meant  they would not be received by the taxpayer’s representative until Saturday 3 November 2007 at the earliest.

In this short window, it was “theoretically possible” for Mr Howard to “rummage through all the  closure notices in their envelopes that were still in HMRC’s clutches” to remove the discrepant  closure notices. Had this been done, none of the problems that ensued would have arisen. Instead,  Mr Howard sent the taxpayer’s agent the following email:

“Morning Liam, I wanted to pre-warn you that 2 Closure Notices were issued today in error in  relation to B&W Plc for periods ended 31/3/03 and 31/03/04. We will be taking action to correct the  position in due course. I’ll confirm the position in writing within the next few days.

Best regards


The agent, who was away from the office due to illness, responded: “Ok Gavin. Thanks”. The UT suspected that the agent: “Never really addressed his mind to Mr Howard’s email beyond  acknowledging it.”

HMRC’s definitive response was sent on 8 November 2007. The key paragraph from that letter reads:

“The present position is that, albeit in error, closure notices were issued on 30 October 2007 and  those notices are effective under Paragraph 32(1) Schedule 18 FA1998 marking the completion of the  enquiries into the returns…”

In April 2008, having received legal advice that the closure notices could be withdrawn, HMRC  sought to do so. On 4 February 2010, Mr Howard reiterated his view that HMRC could withdraw the  closure notices and that further ones be issued, and this was done.

UT’s decision

The UT held that the closure notices were issued either when posted or on receipt. It did not, in  the event, need to decide between these options, but considered that the former was to be  preferred.

The UT considered that HMRC could recall the closure notices prior to issue, and that this could  have been effected by the 31 October 2007 email. However, that email simply sought to suspend the  position. The agent’s assent (even if with minimal thought), the UT held, was consistent with this,  and so the closure notices were effectively put on hold.

This remained the case until the 8 November 2007 letter. In the UT’s view, this letter effectively  lifted the agreed suspension and so the closure notices became effective. Had this letter stated  that the closure notices were to be withdrawn, then they would not have become effective.

This being the case, the UT concluded as follows:

The taxpayer would not make any amendments to the closure notices because they were in its  favour 2.  HMRC could not revisit the closure notices after they had been issued 3.  HMRC could not appeal to challenge its own figures 4.  HMRC could not withdraw the closure notices at a later date and substitute fresh ones


This decision provides some useful guidance on when closure notices should be regarded  as issued.  The UT was clear that, at the earliest, it would be on posting (the option which it preferred  rather than on receipt). The decision also confirms that once a closure notice has been issued by  HMRC, even in error, it is effective and brings the relevant enquiry to an end. To read the decision click here.