67. We acknowledge those points. However, the power of HMRC under sub-paragraph (2A) is limited
in some important respects. The nature of the amendments that can be made by a notice under sub-
paragraph (2A) is limited to those “that are required to give effect to the conclusions stated in the closure
notice”. That is to say the amendments must be necessary to ensure consistency with the conclusions
stated in the relevant closure notice. Furthermore, a notice under sub-paragraph (2A) can only make
amendments to company tax returns that have been delivered by the company. It cannot specify
amendments that must be made to company tax returns that may be delivered in the future. The power is
not required for future returns as HMRC will be able to open an enquiry and make the relevant
amendments in a closure notice for the relevant period.
68. The principal purpose of sub-paragraph (2A) therefore is to provide a limited power to HMRC to
make amendments to other returns in order to ensure that they remain consistent with the decisions made
in the relevant closure notice in circumstances where it may be unable to open an enquiry or issue a
discovery assessment. It does not provide a “cure-all” for HMRC errors.
69. The limited nature of the right goes some way to address Mr Upton’s points regarding certainty and
finality, although we accept that this is not a complete answer to them. However, the issue of a notice
under sub-paragraph (2A) will inevitably disturb the finality of other returns. This will be the case
whenever the notice is issued whether at the time of the relevant closure notice or otherwise.
70. The alternative view – that the notice under sub-paragraph (2A) must be given at the same time as the
closure notice – would limit this right further. That could lead to a situation in which HMRC has no
ability to ensure consistency between the return for the enquiry period and other returns unless it had
issued the sub-paragraph (2A) notice at the same time as the closure notice. As Miss Choudhury points
out, in the present case, the effect could be that the return for the 2008 period would contain claims for
relief which had been denied in all other periods. There is no reason for imposing such a restriction on
the words of the legislation and it would not be in accordance with our understanding of the purpose of
the provision.
71. As for Mr Upton’s concerns that the taxpayer should be able to weigh up all of the consequences of
the decisions in the closure notice before deciding whether or not to appeal, we think that this issue is, in
part, addressed by the limited nature of the power to make consequential amendments. If that power is
limited to amendments that are necessary to give effect to the decisions in the closure notice, for the most
part, the taxpayer is likely to be able to ascertain what the effect on other returns is likely to be. In any
event, the taxpayer has a right to appeal against the notice under sub-paragraph (2A). It would also be
open to the taxpayer to appeal against the relevant closure notice at the same time. If that appeal was out
of time, the Tribunal would be able to take into account any delay in the delivery of the notice under sub-
paragraph (2A) as a factor in deciding whether or not to permit an appeal against the closure notice out of
time.
72. Mr Upton also referred to various passages from HMRC’s Manuals. Those passages set out guidance
to HMRC officers as to the usual practice that should be adopted when making consequential
amendments under paragraph 34(2A). They demonstrate that HMRC’s practice will usually be to issue a
notice of consequential amendments at the same time as the relevant closure notice. That is clearly good
practice. However, we do not regard those extracts as evidence of the scope or intended scope of the
provision.
73. For these reasons, our view is that, on a proper construction of paragraph 34, a notice under sub-
paragraph (2A) is not required to be issued at the same time as the relevant closure notice.
Spring Capital’s second argument
74. Mr Upton’s second argument is that a notice under sub-paragraph (2A) must be given within a
reasonable time after the closure notice is issued. This argument rested upon the principle that courts and
tribunals should, when considering opposing constructions of legislation, favour an interpretation which
secures a just and fair result.
75. For the reasons that we have given, the natural meaning of the words of the statute – which in our
view do not require a notice under sub-paragraph (2A) to be issued at the same time as the relevant
closure notice – produces a fair and just result and one which is consistent with the underlying purpose of
the provision. The legislation does not contain a manifest error which would require or permit a court or