The Upper Tribunal has handed down a decision in Gwyn-Jones v HMRC, concerned with determining the ‘matter in question’ for the purposes of an appeal to the FTT (section 49D of the Taxes Management Act 1970 (‘TMA’)). This is the first case to consider the scope of the appeal in the context of a residence appeal.

In 2016, HMRC issued a closure notice to the Appellant for 2005/06 on the basis that he was UK resident in that year. Before issuing the closure notice, HMRC had asked the Appellant’s accountant to give some thought to what income and gains should be included on an amended return. No information was provided. The amendments made by the closure notice were therefore estimates, reflecting certain gains and employment income for that year of which HMRC were aware.

In 2021, the Appellant’s accountant emailed HMRC documents including unaudited financial statements for a Guernsey registered company, which recorded the payment of a £16,000,000 dividend in the period ended 31 May 2006. HMRC held bank records which showed the payment of a £16,000,000 dividend into the Appellant’s Guernsey bank account in December 2005. 

In 2023, HMRC applied to amend their statement of case to state that the £16,000,000 was chargeable to income tax and invite the First-tier Tribunal to exercise its power pursuant to section 50(7) TMA to increase the amount of the Appellant’s self-assessment to reflect the taxability of the dividend.

Before the First-tier Tribunal the Appellant resisted the application to amend on the basis that the dividend was outwith the scope of the appeal, as it was not reflected in the amendments made by the closure notice. The First-tier Tribunal disagreed and granted HMRC’s application. The First-tier Tribunal concluded that when the closure notice was read in context and in light of the entirety of the factual matrix, the meaning of the conclusions in the closure notice are that the Appellant was UK resident and chargeable to tax in the UK on all of his world-wide income and gains.

On appeal, the Upper Tribunal upheld the First-tier Tribunal’s decision. Referring to Investec Asset Finance plc v HMRC [2020] EWCA Civ 579  and Orsted West of Duddon Sands (UK) Ltd v HMRC [2025] EWCA Civ 279, [2025] 1 WLR 3887 held that the context of the closure notice and the surrounding circumstances may demonstrate that the subject matter of an appeal is broader than the particular conclusion and adjustments addressed in the closure notice and that the First-tier Tribunal can revisit entries in a return which HMRC have not amended if that is needed to give full effect to the First-tier Tribunal’s conclusions, provided it does not stray beyond the ‘matter in question’. As there was no challenge to the First-tier Tribunal’s construction of the conclusion stated in the closure notice, the appeal had to be dismissed, as section 31 TMA permitted appeals be made against any conclusion stated or amendments made by a closure notice. 

Of particular note to practitioners will be the Upper Tribunal’s comment, recorded in its decision and put to counsel during submissions, querying whether the ‘matter in question’ was affected by the fact that HMRC had been enquiring into the Appellant’s residence position, which is potentially a more open-textured issue than an enquiry into (say) whether a particular type of expenditure on windfarms qualifies for capital allowances. This suggests that the scope of an appeal in a residence appeal may, of its nature, be wider than an appeal concerned with the taxability of a particular transaction.

Christopher Stone KC and Colm Kelly represented HMRC.