Are retrospective assessments permissible when HMRC didn’t question the tax treatment during prior inspections?

The recent High Court case of R (o.a.o. Realreed Ltd) v HMRC illustrates that HMRC can make valid retrospective assessments despite not having questioned the tax treatment of the relevant supplies during a prior inspection. The court held that the absence of an HMRC challenge during an inspection is not, in itself, sufficient to establish a legitimate expectation – and even if it had, the company had not relied on it to its detriment. Taxpayers wanting a greater degree of comfort in respect of their tax treatment should consider making a non-statutory clearance request. Taxpayers should also make contemporaneous notes of conversations with HMRC, as they can prove essential in a future dispute with HMRC.