Tinkler v Revenue and Customs [2021] UKSC 39

HMRC opened a tax enquiry but sent the notice to Mr Tinkler's old address. His tax advisers BDO acknowledged the enquiry and corresponded with HMRC. Years later, Tinkler argued the enquiry was invalid. The Supreme Court held Tinkler was estopped by convention from denying the enquiry's validity.

Facts

Mr Tinkler appointed BDO Stoy Hayward as his tax advisers, authorising them via Form 64-8 to deal with HMRC on his behalf. On 1 July 2005, HMRC purported to open a section 9A enquiry into Mr Tinkler’s 2003/04 tax return by sending a notice to his former address at Heybridge Lane, Cheshire, which was no longer his residence. HMRC sent a copy of this notice to BDO. BDO responded on 6 July 2005, acknowledging the enquiry and stating they could not amend the Return ‘as the Return is now the subject of a section 9A TMA 1970 enquiry’. BDO continued to correspond with HMRC about the enquiry until HMRC issued a closure notice in August 2012. It was not until January 2015 that Mr Tinkler first argued the enquiry was invalid due to improper service of notice.

The Form 64-8 Authority

While Form 64-8 gave BDO wide authority to deal with HMRC, it was held that BDO did not have authority to receive a notice of enquiry on Mr Tinkler’s behalf. However, BDO did have apparent authority to represent Mr Tinkler in dealings with HMRC regarding the enquiry.

Issues

The sole issue before the Supreme Court was whether Mr Tinkler was estopped by convention from denying that HMRC had opened a valid enquiry under section 9A TMA.

Judgment

The Supreme Court unanimously allowed HMRC’s appeal, holding that estoppel by convention applied.

The Benchdollar Principles

Lord Burrows affirmed the five principles laid down in Revenue and Customs Comrs v Benchdollar Ltd [2009] EWHC 1310 (Ch), as amended by Blindley Heath Investments Ltd v Bass [2015] EWCA Civ 1023:

(i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them… something must be shown to have ‘crossed the line’ sufficient to manifest an assent to the assumption.
(ii) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it.
(iii) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.
(iv) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.
(v) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position.

Application to the Facts

Lord Burrows held that all five principles were satisfied. BDO’s letter of 6 July 2005 expressly affirming that the Return was ‘now the subject of a section 9A TMA 1970 enquiry’ constituted conduct ‘crossing the line’. BDO assumed responsibility for the common assumption, and HMRC relied upon it by not sending a fresh notice before the limitation period expired. HMRC suffered detriment as the enquiry and closure notice would be invalid if estoppel did not apply, while Mr Tinkler would gain approximately £635,000.

Misrepresentation Not a Bar

Lord Burrows rejected the Court of Appeal’s emphasis on HMRC having initiated the mistake through misrepresentation:

On these facts, it was largely irrelevant that HMRC may be said to have initiated the common mistake by a misrepresentation and to have been careless in doing so.

Statutory Protection Not Undermined

The Court distinguished Keen v Holland [1984] 1 WLR 251, holding that section 9A TMA was permissive as to the method of giving notice, and the parties could have agreed an alternative method. Estoppel by convention therefore did not undermine the statutory purpose.

Implications

This case provides authoritative Supreme Court guidance on estoppel by convention. The judgment confirms that the Benchdollar principles, as amended, represent a correct statement of the law for both contractual and non-contractual dealings. The case establishes that estoppel by convention can apply even where the party raising the estoppel initiated the common mistake through carelessness or misrepresentation. The doctrine extends to mutual dealings between HMRC and taxpayers, and technical defects in procedure may be overcome where parties have conducted themselves on the basis of a shared assumption that proper procedure was followed.

Verdict: Appeal allowed. Mr Tinkler was estopped by convention from denying that HMRC had opened a valid enquiry under section 9A TMA 1970.

Source: Tinkler v Revenue and Customs [2021] UKSC 39