Information in another person’s return is not disclosed; it is discoverable- Miesegaes

Fri 17 Jun 2016

The First Tier Tribunal (FTT) decision in Simon Miesegaes v HMRC emphasises that the definition of what is disclosed by a taxpayer for the purposes of a discovery assessment is restricted to information provided in a tax return or in information supplied with and clearly identified as forming part of a return. It also highlighted the distinction between information that may be inferred as having been provided (the information in an AAG1 that has been accepted by HMRC – resulting in the issue of an SRN) and that which cannot be inferred (white space disclosure in trust tax return).
Simon Miesegaes, who held an interest in possession under a Guernsey trust, erroneously claimed 100% double taxation relief (DTR) under the UK-Guernsey double taxation agreement on his tax return. His return did not contain sufficient information for an HMRC officer to have been able to recognise that the DTR claim was incorrect and HMRC only became aware that the claim was incorrect from examination of the Trust’s returns.
HMRC therefore raised discovery assessments on Miesegaes who claimed that HMRC could not do so because full disclosure of all his circumstances had been made when the Trust’s returns were taken into account alongside his personal returns.
This may sound like the sort of scenario where one would see a taxpayer appearing in person but Mr. Miesegaes was represented by a QC. However, the use of counsel may have owed more to the amounts of tax potentially at stake where a marketed capital gains tax (CGT) avoidance scheme had been used, than to the chances of success.