Death and discovery: does deliberate behaviour equate to a criminal charge?

The Upper Tribunal (UT) has upheld the decision made by the First Tier Tribunal (FTT) in the case of The Personal representatives of Michael Wood (deceased) v HMRC [2016] UKUT 346 (TCC) in relation to assessments raised under Section 29 TMA for a 20 year period and the validity of these on the grounds of deliberate behaviour, following the taxpayer’s death.


In June 2010 Mr Wood, a dentist, made a disclosure of previously unpaid tax totalling £743,424 through the Tax Health Plan, a disclosure opportunity available to medical professionals. However, HMRC were not satisfied that his disclosure met the terms of the disclosure facility and opened a Code of Practice 9 investigation, opening up his tax affairs for the previous 20 years.  It was agreed that a disclosure report would be submitted to cover the relevant years. Unfortunately, the taxpayer failed to do so by the September 2011 deadline and in August 2012 HMRC raised discovery assessments for the tax years 1992/93 to 2005/06, in the continued absence of the report.  Mr Wood appealed against the assessments in September 2012 and subsequently died on 22 May 2013.

In September 2013 Mr Wood’s advisers wrote to HMRC, contending that it was impossible to have a fair trial on the main issue as to whether or not their client had acted deliberately, since Mr Wood had died. His widow and personal representative, Mrs Greer Wood, argued that to contest the disputed assessments would be a breach of her human rights under Article 6 ECHR as HMRC’s use of the powers conferred under Section 36 TMA 1970 constituted charging her husband with a criminal offence.

In advance of the hearing, HMRC vacated the penalty notices for deliberate behaviour on the basis that the penalty under Section 95 TMA 1970 was a criminal charge.

The FTT ruled that the Section 29 discovery assessments should not be set aside by reason of Mr Wood’s death and a subsequent appeal was made to the UT.


The UT therefore had to consider whether HMRC raising assessments on Mr Wood under the extended time limit provisions at Section 36 TMA 1970 amounted to a criminal charge.

The appellant argued that charging a penalty under Section 95 TMA 1970 and using the extended time limit provisions at Section 36 TMA 1970 are the same in that both require deliberate behaviour and are penal in nature. On the basis that HMRC abandoned the Section 95 penalties which had been imposed on Mr Wood during his lifetime, the same should apply for the Section 36 assessments.

The UT found that Section 36 is not penal in nature on the basis that the purpose of the provisions is to enable HMRC to recover the tax due for earlier years, and no more. Section 36 is merely ‘a gateway through which the path to a discovery assessment can be opened’.  It was agreed that the burden of proof in relation to deliberate behaviour lay with HMRC but that this had already been established at the point at which the 20 year assessments were issued.  The burden of proof then shifted to the taxpayer to demonstrate the correct amount of tax.  The UT found that:

‘the combination of a 20 year time limit and a reverse burden of proof equally does not produce the result that there is a criminal charge or a penalty’.

The case was referred back to the FTT to progress the substantive hearing of the appeal and determine the tax due.

Death during an enquiry?

The Michael Wood case provides a useful illustration as to the potential difficulties that may be faced when dealing with a deceased taxpayer mid-way through an enquiry. It is important to bear in mind the specific legislation concerning deceased taxpayers and the relevant time limits:


  • In the case of a deceased person, an assessment cannot made more than 4 years after the end of the tax year in which the taxpayer died (i.e. where the taxpayer died in 2011/12, an assessment may not be made after 5 April 2016).
  • Personal Representatives that have received a request to complete tax returns for a period prior to the tax year of death or a discovery assessment should always check to ensure that HM Revenue and Customs are within the statutory time limits.


  • Where tax was underpaid by the deceased, late payment interest will run from the due date until the date of payment (currently at the rate of 3%).
  • Therefore, where the Personal Representatives believe that tax is likely to be due they could consider making a payment on account in order to reduce the late payment interest due.


  • HMRC have historically levied penalties on the Personal Representatives where the deceased’s tax affairs were not up to date.
  • However, the current practice accepts that applying penalties to the Personal Representatives breaches Article 6 ECHR and this was demonstrated in the case of Michael Wood as HMRC withdrew the penalties which had been raised during his lifetime. It is accepted that for the purposes of EU law, ‘civil penalties’ that are calculated as a percentage of the tax due are classified as criminal and not civil charges.
  • Automatic penalties (penalties of a fixed amount rather than a percentage of the tax at stake) such as an automatic late filing penalties do not strictly breach Article 6.  However, HMRC’s guidance suggests that in many cases it may be possible to appeal the penalties.  The basis of the appeal will depend on whether the deceased died before or after the due date for submitting the return.
  • Generally speaking therefore, the Personal Representatives should not normally be liable to penalties in respect of any irregularities in the deceased’s tax affairs.

Information requests

  • Requests for information under Schedule 36 FA 2008 may only be given within a 4 year period following the death of the taxpayer

As with all instances of HMRC using their formal powers, it is essential that the Personal Representatives understand both their own rights and obligations, and those of HMRC.

For further information concerning enquiries or assessments involving a deceased taxpayer, please call TaxDesk on 0845 4900 509 and ask for Isobel Clift.