Osbourne v HM Inspector of Taxes [2003] UKSC SPC00393 (20 November 2003)

Capital gains tax – details of disposal given for post-transaction valuation check – subsequent income tax repayment claim not referring to disposal – invalid enquiry notice – whether obligation to complete self-assessment form – whether capital gains pages sufficient on their own – whether “discovery” assessment valid

THE SPECIAL COMMISSIONERS

	GRACE OSBORNE (DECEASED)		Appellant

	- and -

	MRS J.E. DICKINSON (HM INSPECTOR OF TAXES)	Respondent

		Special Commissioner:	JOHN CLARK

Sitting in public in London on 9 September 2003

Mr W. Osborne of W. Osborne & Co, Chartered Accountants, for the Appellant

Mrs J.E. Dickinson, HM Inspector of Taxes, Inland Revenue, Respondent

© CROWN COPYRIGHT 2003

DECISION

1.	Miss Osborne appealed against a “discovery” assessment. This was made on her under section 29 of the Taxes Management Act 1970 on 31 October 2002 for the year ended 5 April 1999 in respect of an assessable gain of £7,124 (capital gain £13,924 less annual exemption £6,800). Miss Osborne has died since the making of the assessment, and her brother Mr Winston Osborne, a Chartered Accountant, has since pursued the appeal on her behalf.
2.	The principal issue is whether the Inland Revenue was entitled to make an assessment under section 29. (All references to section numbers in this decision are to the Taxes Management Act 1970, except where otherwise stated.) This raises two subsidiary issues. The first is whether Miss Osborne complied with the notice issued to her under section 8 to make a return for the year ended 5 April 1999. The second is whether Miss Osborne submitted a valid Tax Return for the year 1998-99. The appeal has a wider significance, as it raises a question as to the operation of the self-assessment system, as well as one relating to the treatment of those whose normal position is that they fall outside it because they claim repayments rather than having to account for tax.
The facts
3.	The evidence consisted of an Agreed Statement of Facts, and the Appellant’s bundle of documents, explained in detail by Mr Osborne at the hearing. From the evidence I find the following facts.
4.	On 14 July 1998 Miss Osborne and her two nephews sold all their shares (amounting to the entire share capital) in A.E. Osborne and Sons Limited. On 22 July 1998, Mr Osborne’s firm, W. Osborne & Co, as agents of the two nephews submitted tax forms CG34 to the Northampton Tax District. These constituted requests for a post-transaction valuation check on the disposal of the shares. The firm also submitted provisional capital gains tax computations for all three shareholders. The one relating to Miss Osborne showed the sale of 1,260 shares for £29,400. It also showed that the cost of the shares was to be taken as the value of the shares at 31 March 1982. The 31 March 1982 value suggested was £29,400, the same as the sale proceeds. Based on the 1982 value, the computation showed a capital loss of £12,464, subject to agreement of the valuation. The firm was not aware that Miss Osborne’s tax affairs were dealt with in another Tax District. On 13 October 1998 Mrs Dixon, an Inspector at the Northampton District, wrote to inform W. Osborne & Co that Miss Osborne’s tax affairs were dealt with at Bootle 1 Claims Office. However, she agreed to co-ordinate the post-transaction valuation checks for all three taxpayers.
5.	On 22 March 1999 the Inland Revenue Share Valuation Division wrote to W. Osborne & Co requesting opinions of value for various shareholdings in A.E. Osborne and Sons Limited at specified dates. In its response dated 15 June 1999, the firm indicated that it had discovered a typographical error in the original computation of Miss Osborne’s gain, and enclosed a corrected computation. This showed a gain of £4,841, which would still have been covered by the annual exempt amount of £6,800. (However, this remained subject to agreement of the share valuation as at 31 March 1982.)
6.	On 22 July 1999, Miss Osborne completed a Form R40 claiming repayment of income tax. She prepared this herself, without the assistance of W. Osborne & Co. In this form she declared that she had received dividends and tax credits, building society interest, untaxed National Savings interest on an Investment Account and a Pensioner’s Bond, and the State Retirement Pension. As a result of this claim, Miss Osborne received a repayment of tax of £334.22. On the first page of the Form R40, Miss Osborne did not tick the box showing that she had disposed of capital gains assets for more than the sum referred to in the notes accompanying the form. A copy of these notes was not included in the evidence, but Mrs Dickinson confirmed at the hearing that the figure would have been twice the annual exempt amount, totalling £13,600. The reason for not ticking the box was that Miss Osborne had asked Mr Osborne about this, and he had advised her not to do so; I return to this later, but it should be noted that (as mentioned at paragraph 4 above) the proceeds were £29,400, significantly in excess of £13,600.
7.	On 28 December 2000, Mr Besson of Bootle Gladstone District wrote to Miss Osborne to indicate that he intended to make some enquiries into her repayment claim and that he had requested information from W. Osborne & Co. Mr Besson referred to the claim as being for 1999-2000. (The time limit for opening an enquiry into 1998-99 was 31 January 2001.) In a letter dated 13 July 2001 W. Osborne & Co pointed out that the reference in the enquiry notice was to the wrong year, as it should have been to 1998-99. An exchange of correspondence followed, in which Mr Besson sought to argue that it was clear from the context that the reference should have been to 1998-99. However, W. Osborne & Co resisted this argument and maintained that no valid notice of enquiry had been given for 1998-99, and that the enquiry must be closed.
8.	Mr Besson’s letter dated 12 February 2002 to W. Osborne & Co accepted this argument and agreed that the enquiry for 1999-2000 would be closed. Mr Besson explained that if the result of the negotiations with Shares Valuation Division was that Miss Osborne had made a gain in excess of the annual exempt amount, there were two options available to him to recover the tax due. The first would be, as Miss Osborne had not made a return under section 8, for Mr Besson to issue a return and make an enquiry under section 9A when the return was received. The second was that he could discover that a capital gain had not been assessed and make a discovery assessment under section 29(1)(a).
9.	On 9 May 2002, W. Osborne & Co wrote to the Share Valuation Division confirming agreement to the 31 March 1982 valuation of the shares in A.E. Osborne Limited as £6 per share. This information was provided through Northampton District to Bootle Gladstone District, which then issued a self-assessment return for 1998-99 to Miss Osborne on 9 July 2002, and informed W. Osborne & Co that it had done so. This return form was undated. W. Osborne & Co replied on 16 July 2002 questioning whether, as Miss Osborne had already completed a claim for repayment for 1998-99, it would not be more appropriate to issue the relevant capital gains tax pages for completion as mentioned in that claim form, rather than issuing a full self-assessment return. Mr Besson replied on 19 July 2002 to indicate that the question was hypothetical, as he had already arranged for the issue of a self-assessment return; a form R40 (CG) might have been more appropriate if it had been requested by ticking the appropriate box on the front of the claim form, but this had not been done. The self-assessment form was also an opportunity for Miss Osborne to consider whether there was anything else that needed to go on the return. W. Osborne & Co replied on 12 August 2002 and explained that the reason why Miss Osborne had not ticked the box was that she was aware that a Form CG34 together with a provisional capital gains tax computation had been submitted to the Inland Revenue on 22 July 1998.
10.	Following further exchanges, W. Osborne & Co explained in their letter dated 16 September 2002 that they had prepared the self-assessment return, but that they were not prepared to submit it at that stage. However, they enclosed Form SA 108 (the self-assessment Capital Gains pages), showing a capital gain of £7,124 after deducting the £6,800 annual exempt amount, and Miss Osborne’s cheque for £1509.68 on account of her capital gains tax liability for 1998-99. In the bundle there is no copy of any computation at that stage of the amount of tax payable.
11.	On 25 October 2002 Mr Besson wrote to Miss Osborne. He explained that the self-assessment return form had not been returned (completed) to the Inland Revenue. He gave notice of the proposal to make an assessment for 1998-99 for the purpose of making good tax which might have been underpaid by reason of her negligent conduct in failing to submit her return for that year within the time allowed. This was issued on 31 October 2002, showing a capital gain of £7,124, with tax due shown as £1,545.52. On 4 November 2002 W. Osborne & Co gave formal notice of appeal on behalf of Miss Osborne; it appears that this notice, containing an indication of the adjustment required for the tax calculation, was not received by the Inland Revenue. On 2 September 2003, in the course of preparation for the hearing, Mr Scott, an Inspector of Taxes at Sefton Compliance District, acknowledged that the Inland Revenue’s calculation of the tax had been incorrect. He accepted that the amount due was £1,509.68 in accordance with the figures submitted by W. Osborne & Co, and not £1,545.52, as part of the lower rate band remained available to allocate against capital gains instead of savings income.
The parties’ contentions
12.	Mr Osborne argued that a return of Miss Osborne’s income had been included on the tax claim form R40 for 1998-99. Section 8 did not specify a form number as a basis for providing the information. Section 113 stated that no person was to be required to make more than one return annually of the sources of his income and the amounts derived therefrom. He argued that information delivered to one tax office was deemed to have been delivered to the Inland Revenue; this had been acknowledged for some considerable time. This meant that the information concerning the disposals sent on 22 July 1998 had been correctly delivered to the Inland Revenue. According to the definition of “return” in section 118, it included any statement or declaration under the Taxes Acts. It followed that, as the form R40 had been submitted, the requirements of section 8 had been fulfilled. He cited R v Special Commissioners, ex parte Tracy [1996] STC 34 at 36c as supporting his view that the form R40 did amount to a return, and also supporting his interpretation of section 118. He had taken the view on behalf of Miss Osborne that as the self-assessment return form SA100 did not contain any more information than the Form R40, it should not be submitted, even though Miss Osborne had signed it. The form SA100 did not contain an issue date, so did not make clear when it was due to be submitted. Although the Inspector had been aware that a chargeable asset had been disposed of, no Capital Gains Tax sheets had been issued with the SA100 form. W. Osborne & Co had prepared a set from the agreed information, and had submitted them to the Inspector at Bootle together with Miss Osborne’s cheque in payment of the capital gains tax which they had calculated. The “discovery” assessment had been issued to Miss Osborne on 31 October 2002, 43 days after the payment of tax as calculated by the firm.
13.	Mr Osborne submitted that the discovery assessment should not have been issued for the purpose of making good tax which might have been underpaid by reason of negligent conduct in failing to submit the tax return for 1998-99 within the time allowed. At the time of its issue all the tax for 1998-99 had been paid, the tax shown on the notice of assessment having been incorrectly calculated by the Inland Revenue. This error had subsequently been acknowledged, and Mr Osborne questioned what tax had been underpaid.
14.	Mrs Dickinson explained that not all taxpayers were within the self-assessment system. Those like Miss Osborne who complete an annual repayment form are not within self-assessment. They complete a repayment form, not a tax return. When a taxpayer wishes to claim repayment of tax, he completes a repayment claim form R40. He is not required to complete this by notice given under section 8, or under any other provision. This form is something that he completes because he wishes to have tax repaid by the Inland Revenue; the form only asks for limited information.
15.	Mrs Dickinson contrasted the effect of a notice under section 8. This imposes a statutory requirement on the taxpayer. This is to make and deliver to the Inland Revenue a return containing such information as may be reasonably required in pursuance of the notice in order to establish the amount on which he is chargeable to tax for the year of assessment in question. She maintained that this requirement is far wider than anything on a Form R40, and the return form bears no resemblance to a Form R40.
16.	She explained that section 113 allows the Board of Inland Revenue to prescribe the form of the section 8 return. The Board had done so. The section 8 notice on the return tells the taxpayer that he is required by law to send a return of his income and gains using:
(1)	the standard printed return form sent to him by the Inland Revenue, or
(2)	a Revenue approved version of the form or software, or
(3)	the Revenue’s electronic logging service available to agents, or
(4)	the Revenue’s Internet filing service.
She argued that anything else that the Inland Revenue receives in any other form is not a return under section 8 because it is not in the prescribed form. A form R40 is not in the prescribed form. It does not satisfy the notice to file issued under section 8. It is not a return.
17.	She contended that when Miss Osborne completed the Form R40, she claimed a repayment of tax; she did not make a return under section 8. The Inland Revenue had therefore been entitled to issue the 1998-99 return on 8 July 2002. She explained that the Revenue always issues a self-assessment return to enable the taxpayer to declare and self-assess. The reason for making the discovery assessment had been the refusal to complete the self-assessment return. If Miss Osborne had ticked the box on Form R40 to indicate that she had made a disposal for capital gains tax purposes, the capital gains tax pages for her to provide the information would have been issued to her in a different form from the version provided to self-assessment taxpayers. There would have been no repayment; the Revenue would have waited until the information had been provided and it had been established whether there was a liability to be offset against the repayment, or whether there would be additional tax to pay. If there were additional tax to pay, an assessment would have to be made.
18.	If it proved necessary to enquire into the gain, a formal enquiry would have to be opened. In Miss Osborne’s case, an enquiry had been opened, but a mistake had been made. The wrong year had been referred to on the enquiry notice. Mrs Dickinson maintained that the position had been clear; however, the Inland Revenue had had to accept that the notice was invalid, and that the enquiry must be closed down. This meant that instead the Revenue had been compelled to follow the formal route and issue a return. The purpose of the self-assessment system was too make the taxpayer self-assess and pay the tax due. Had Miss Osborne ticked the box on Form R40 showing that she had sold assets for more than £13,600 (substantially more in her case, the figure being £29,400) this procedure would not have been necessary. It may not seem to have mattered at the time, as the apparent result was a loss. The total interest incurred on the delayed tax was about £250. The end result of the enquiry procedure would have been an assessment. The refusal to submit the completed return had meant that the only way of collecting the tax was to make an assessment. What the Inland Revenue had wanted was the standard form return and the capital gains tax pages, amounting to the full return, all to be completed. It would not have been necessary to go down this convoluted route had it not been for the error in the enquiry notice. No penalty was being sought.
19.	In relation to discovery, she explained that where the Inland Revenue discovers that chargeable gains which ought to have been assessed to tax have not been assessed, section 29(1)(a) allows the Inspector to make an assessment in the amount which ought to be charged in order to make good to the Crown the loss of tax. There is a loss to the Crown when tax is not paid by the statutory due and payable date. In Miss Osborne’s case the due and payable date was 31 January 2000 but the tax had not been paid until 16 September 2002.
20.	When Miss Osborne had completed the repayment claim form in July 1999, no information had been given on the form about the disposal of chargeable assets. However, at that date, Miss Osborne’s tax office had already been told by the Northampton Inspector that the share disposal had occurred in July 1998 and that share valuations were being negotiated. As things then stood, subject to the valuation negotiations, the capital gain calculated by W. Osborne & Co was £4,841, on which no tax was chargeable, as it was covered by the annual exempt amount. Once the share valuation negotiations had been concluded and the values agreed in May 2002, it had become possible for the first time to quantify the chargeable gain. The Inspector had discovered that there was a chargeable gain which ought to have been assessed to capital gains tax but which had not been so assessed. The assessment had been made in accordance with section 29(1)(a). Miss Osborne’s failure to complete the return issued under section had amounted to negligent conduct, as specified in section 29(4).
21.	Mrs Dickinson responded to Mr Osborne’s arguments. First, on the argument that section 113 states that no one has to make more than one return annually, Miss Osborne had not made a return, as form R40 was not a return in the form prescribed by the Board of Inland Revenue. Secondly, she referred to his argument that section 118 defines a return as including any statement or declaration under the Taxes Acts, so that the Form R40 did constitute a return. She explained that this provision was designed to assist taxpayers by allowing them to submit schedules and statements as part of their return, or to make returns in substitute form. All substitute forms must have prior Revenue approval. On the argument that R v Special Commissioners, ex parte Tracy supported Mr Osborne’s view that the R40 was a return and also supported his interpretation of section 118, she maintained that on the contrary the case supported the Revenue’s view that the form R40 is not a return. Buxton J was clear in saying that section 118 did not mean that any statement or declaration counted as a return. It covered formal tax returns and the documents sent in with them. It covered information given later in connection with the return. However, it did not cover other statements, declarations, elections etc.
22.	In summary, the Revenue’s submission was that Miss Osborne had neglected to make a return under section 8 for 1998-99. As she had an agreed taxable gain of £7,124, the Revenue was able to make an assessment under section 29. The appeal should be dismissed.
23.	In response, Mr Osborne argued that Miss Osborne had not been negligent within the terms of section 29(4), and that the second condition in section 29(5) had not been met. He contended that the officer had been aware of the circumstances falling within section 29(1). The information had been available from Miss Osborne’s R40 claim, and information on the gain had been provided within eight days of the disposal.
Conclusions

24.	I regard this as an unfortunate case, with a history of errors on both sides. The initial capital gains computation submitted with the request for a post-transaction valuation check was incorrect, showing a loss instead of a gain. I will deal below with the question whether it was incorrect for Miss Osborne not to tick the box on the form R40. As Mrs Dickinson accepted, the notice of enquiry, although issued in time, referred to the wrong year. Had this been issued correctly, the question of the capital gains tax liability could have been dealt with as part of the enquiry procedure, avoiding the need to issue an assessment under section 29. When the self-assessment return was issued, this did not show the date, and therefore as a formal matter it was not apparent by which date it was due to be sent back duly completed to the Inland Revenue.
25.	It is clear that sending a computation with a Form CG34 requesting a post-transaction valuation check does not amount to the submission of a return. It merely amounts to putting information in front of the Inland Revenue in an attempt to agree in advance the figures to be included in a return to be submitted to the Revenue at a later stage. Mr Osborne argued in correspondence that information delivered to one tax office is to be deemed to have been delivered to the Inland Revenue. He was not seeking to argue as such that this information amounted to a return of Miss Osborne’s gain. However, his argument amounted to saying that information already provided to one part of the Inland Revenue must be treated as linked to subsequent information provided to any other part of the Inland Revenue about the same taxpayer. The letter enclosing Form CG34 used Miss Osborne’s National Insurance number as a reference; a single taxpayer reference was not used for her until July 2002. Form CG34 and the subsequent correspondence from Mr Osborne’s firm did not at any stage involve Miss Osborne making a declaration of the gain until the submission of the Capital Gains pages in September 2002; I consider this later.
26.	The submission of Form CG34 did not absolve Miss Osborne from her obligation to indicate at the time of completing Form R40 that she had made a disposal of assets for a consideration of more than £13,600. This obligation applied whether or not she had made a gain. Even if, as shown by the erroneous computation, there had been a loss, her obligation was to provide the Inland Revenue with all the information necessary to verify the correct amount of the repayment of income tax to be made to her. In the event of a loss, or of a gain no greater than the annual exempt amount, no adjustment would have been necessary. If (as happened in her case) the tax on the gain might turn out to reduce or eliminate the income tax to be repaid to her, the Inland Revenue needed to know this so that repayment could be postponed until the exact amount of the gain could be established. I accept Mrs Dickinson’s argument that Form R40 is not a return: it is a claim, and is not made in response to a notice given by an Inland Revenue officer. It is in a form designed by the Inland Revenue to establish the correctness of information given in support of the claim, but this form is not prescribed by section 113. The taxpayer has to declare that the details given are correct and complete. Miss Osborne’s form was not, as she had made no reference to the disposal of assets. Normally, in the absence of any chargeable gains, Miss Osborne would have fallen completely outside the self-assessment system. Had she notified the disposal of assets through the Form R40 procedure, it seems that she would have still been kept outside it, as she would have been asked to complete a special version of the Capital Gains pages, and the tax due would have been dealt with by way of an assessment. (This appears consistent with Mr Osborne’s reference in the correspondence to encountering in practice special arrangements for other individuals within the Form R40 procedure.) It is a matter of regret that Mr Osborne advised her not to tick the box and follow the procedure as set out in the note on the form.
27.	The normal procedure for dealing with the omission to provide information about the disposals in the course of making the R40 repayment claim would have been to open an enquiry into the relevant year. Mr Osborne’s challenge to this, on the formal ground that the notice referred to the incorrect year, inevitably led the Inland Revenue to its next course of action, to issue a self-assessment return for Miss Osborne to complete. It would have saved a great deal of time and trouble if Mr Osborne had been prepared to agree, in the interests of better relations between taxpayers, their advisers and the Inland Revenue, that the notice should be treated as issued in respect of the correct year. The price of insisting on the formal position was the complication that ensued, including the need to bring this matter to a hearing. I accept that there may be certain defects in procedure so fundamental that they cannot be cured, as in the passage Mr Osborne cited in correspondence from Baylis v Gregory [1987] STC 297, referring to an assessment made for the incorrect year held by the Court of Appeal to be incapable of amendment by the courts under section 114. Where, as here, alternative procedures are available to the Inland Revenue, taxpayers and their advisers should consider whether there is any practical purpose in taking a stand on a matter of form.
28.	As Miss Osborne had not made a return of her income, nor any return of her capital gains, she clearly did have an obligation to complete and submit the self-assessment return form as well as the Capital Gains pages. The information already contained in the Form R40 was available to the Inland Revenue, but not in the prescribed form as set out in the return form; in addition, the Revenue needed to have a formal return of the capital gains. Merely submitting the Capital Gains pages did not amount to the submission of a return in accordance with section 8; the form of such a return is prescribed by section 113. (Submitting the pages on their own meant that they were not accompanied by a signed and dated declaration, one of the formal requirements for a return.) As Form R40 is not a return, I do not accept Mr Osborne’s argument that completing the self-assessment return form would have involved Miss Osborne in completing more than one return for 1998-99. In any event, section 113 merely refers to “the desirability of securing, so far as may be possible, that no person shall be required to make more than one return annually of the sources of his income . . .” This would not preclude an obligation to complete more than one return if this had applied here. On the question of the Capital Gains pages, it was for the taxpayer or her adviser, as in all cases involving self-assessment, to obtain the necessary pages for the purposes of making a complete return.
29.	As the procedure which Mr Osborne advised Miss Osborne to adopt in relation to the self-assessment form meant that she did not submit a completed form (thus rendering academic the question of the missing date on the form), the inevitable next step was the discovery assessment. Mr Osborne objected to this on the ground that the tax had already been paid. I deal below with the question whether there was a loss of tax as referred to in section 29(1). The first question is whether chargeable gains which ought to have been assessed to tax had not been assessed. I consider this requirement to have been fulfilled. There was no self-assessment complying with sections 8 and 9, as the full form had not been sent back completed to the Inland Revenue. As far as capital gains tax is concerned, the purpose of a discovery assessment is to ensure that any gains which have not been assessed are subjected to assessment. That was the case here. The Inland Revenue referred in the correspondence to “negligent conduct”. In the absence of a return under section 8, I do not read section 29 as requiring such conduct. Section 29(1) is subject to sub-sections (2) and (3). Each of these refers to the taxpayer having made and delivered a return under section 8 or 8A. The only reference in the section to negligent conduct is by way of qualification to sub-section (3), which is not relevant to Miss Osborne’s situation. As a result, sub-sections (4), (5) and (6) are also irrelevant. I read sub-section (1) as sufficient on its own to justify an assessment in a case where no return has been made. It was therefore unnecessary to make any reference to negligent conduct, an expression which Mr Osborne said that Miss Osborne at her age and in her state of health had found upsetting.
30.	On the question of loss of tax, the correspondence shows that the payment had been made “on account of” Miss Osborne’s capital gains tax liability for 1998-99, and accepted by the Inland Revenue as a payment on account against her self-assessment liability for that year. This payment was not made until 16 September 2002, although the due date for the tax was 31 January 2000. Clearly the tax could not be quantified until after the share valuations had been agreed in May 2002, and there had been no return showing a self-assessment based on provisional details. Nor had such details been provided under the Form R40 procedure. Had there been a return, the Inland Revenue would have had an assessment showing provisional details, so that it would have known that the amount assessable would require adjustment following agreement of the share valuation. As it was, the Revenue had no means of satisfying itself whether the amount paid on account, not being the subject of any return and therefore any assessment, was anywhere near what the ultimate liability might prove to be. (The precise liability was not agreed until a week before the hearing.) All that the Revenue had was certain items of information provided otherwise than by means of a return, with no declaration as to the correctness of the capital gains particulars, and a Form R40 that had been completed incorrectly because the box relating to capital gains had not been ticked when it should have been. As it turned out, the amount paid on account and the amount ultimately found to be due proved to be the same. However, the formal means of verifying this was not available. The Revenue knew only that there was a liability to capital gains tax, and that the due date for payment was thirty-three months earlier than the date of the discovery assessment. In the circumstances it was justifiable to make the assessment for the purposes of making good the loss of tax, using the unverified information available to the Revenue officer. Mr Osborne argued that the Inland Revenue was precluded from making the discovery assessment, either because the tax had already been paid or because the information had already been made available to the Inland Revenue. If this were the case, it would have meant that as there was no other assessment or self-assessment, there would have been no means of obtaining payment of tax in the event either that Miss Osborne had made no payment, or had not paid enough. I do not consider that such a conclusion would be acceptable. It would unduly restrict the powers of the Inland Revenue to recover tax where the appropriate information had not been provided by the taxpayer. Such powers are required even where the taxpayer has in some way provided information to the Inland Revenue, if the form of that information is insufficient to establish the taxpayer’s true liability.
31.	Mr Osborne raised certain points on this decision as initially submitted to him, and I gave Mrs Dickinson an opportunity to comment on these additional points. I have taken into account comments from both of them in arriving at this final version of my decision. One point not covered elsewhere relates to paragraph 10 above. This is the whether there is a requirement to submit to the Revenue a calculation of the tax payable. Mr Osborne maintains that there is not, although he did include calculations in the bundle for the hearing. (The Revenue had not previously seen these.) Mrs Dickinson says that under the self-assessment system the taxpayer can self-assess and do all the calculations himself, or can ask the Revenue to do the calculations for him. She points out that as Miss Osborne did not complete a self-assessment return, it is impossible to say which of these options she would have chosen. She comments that a calculation may not be necessary, but that the Revenue does find such a calculation helpful particularly where, as in this case, a payment is being made which is said to be “on account” of the liability.
32.	I consider that there was a requirement to provide a calculation. Section 9 requires a self-assessment of the amounts of income tax and capital gains tax to which the person making the return is chargeable for the year of assessment. Section 9(2) provides an exception where the return is delivered by the following 30 September, or, where the notice under section 8 is given after the 31 July following the year, the return is delivered within two months of the date of the notice. It appears from the correspondence that the date on which the return was issued to Miss Osborne was 8 July 2002 (even though the form was undated). This form was not submitted within two months, or indeed at any later stage. The precondition for the exemption from producing a self-assessment was therefore not met, even though the date of the letter submitting the Form SA 108 self-assessment Capital Gains pages and the payment on account was 16 September 2002. For the reasons I have already given, these did not constitute a self-assessment return.
33.	I hold that the assessment was correctly raised for the purpose of making good to the Crown tax not assessed in respect of a capital gain for 1998-99 of £13,924.68, on which the tax, after taking into account the annual exempt amount, is £1,509.68. The appeal is accordingly dismissed. I express the hope that both Mr Osborne and the Inland Revenue in their future dealings can avoid similar difficulties arising.

JOHN CLARK

SPECIAL COMMISSIONER

SC 3028/03