Ruling against HMRC policy on partial closure notices
Individual wins battle with HMRC over a partial closure notice around overseas income and domicile.
The First-tier Tribunal has held, in Embiricos v HMRC  UKFTT 236 (TC) (9 April 2019), that a partial closure notice which was introduced in 2017 could be issued under section 28A of the Taxes Management Act 1970 without specifying the amount of tax due. A partial closure notice allows other aspects of the enquiry to continue.
Mr Embiricos, originally from Greece, lived in the UK for many years. In March 2017 he moved to Monaco. HMRC opened an enquiry into Mr Embiricos’s tax returns for the years ended 5 April 2015 and 5 April 2016 in relation to his non-UK domicile status.
As a result of the enquiries, HMRC concluded that Mr Embiricos was domiciled in the UK for the years under enquiry.
Mr Embiricos did not accept that it was necessary or appropriate for HMRC to have the details of his overseas income and gains before the question of his domicile was determined. He therefore applied to the Tribunal for a direction requiring HMRC to issue a partial closure notice, and separately appealed against the information notice on the basis that the information was not reasonably required until his domicile status had been confirmed.
HMRC believed that the closure notice could not be issued until they quantified the amount of tax due if they were correct about Mr Embiricos’s domicile status. HMRC argued that the tax enquiry should look at both items together, and that the domicile status and tax due were indivisibly linked.
The First-tier Tribunal compelled HMRC to issue the partial closure notice as they did not show reasonable grounds for not issuing the notice.
As a result, Mr Embiricos was able to have his domicile status determined first, avoiding (or postponing) the time and effort in establishing the value of his unremitted foreign income and gains.