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You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Mathew v Revenue & Customs (Rev 1) [2015] UKFTT 139 (TC) (31 March 2015) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2015/TC04342.html Cite as: [2015] UKFTT 139 (TC) |
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[2015] UKFTT 139 (TC)
[image removed]
TC04342
Appeal numbers: TC/2014/05257 & TC/2014/06553
INCOME TAX –appeals against Schedule 36 Notices – whether to stay the case – whether appeals made to HMRC – what are statutory records – whether burden of proof is on HMRC – Schedule 36 Notices varied – closure notice applications – whether HMRC has reasonable grounds for not issuing closure notices – held, yes
FIRST-TIER TRIBUNAL
TAX CHAMBER
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JOSHY MATHEW |
Appellant |
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- and - |
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THE COMMISSIONERS FOR HER MAJESTY’S |
Respondents |
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REVENUE & CUSTOMS |
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TRIBUNAL: |
JUDGE ANNE REDSTON |
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MS HELEN MYERSCOUGH |
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Sitting in public at the Royal Courts of Justice, Strand, London on 5 February 2015
Mr James Onalaja of Counsel, instructed by and acting for Mr Mathew.
Mrs Yeeni Naylor and Ms Harry Jones of HM Revenue & Customs Appeals and Reviews Unit for the Respondents.
© CROWN COPYRIGHT 2015
CONTENTS
Topic |
Paragraph |
Introduction |
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Summary of decision |
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Legislation and evidence |
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Findings of fact |
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Preliminary matters |
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Whether to stay the appeal |
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Appealing the Sch 36 Notices |
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Records, Proof and Submissions |
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What are statutory records? |
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The burden of proof in Sch 36 appeals |
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The parties’ main submissions |
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The First Sch 36 Notice |
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Schedule of interests in entities |
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Benefits in kind other than loans |
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Loans |
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Bank accounts |
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Charges on personal assets |
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Decision on the First Notice |
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The Second Schedule 36 Notice |
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The tax year 2011-12 |
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The tax year 2012-13 |
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Conclusions on the Sch 36 Notices and Direction |
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The Closure Notice Applications |
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The law on closure notices |
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Submissions on 2011-12 and 2012-13 closure notices |
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Decision on 2011-12 and 2012-13 closure notices |
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Closure notice applications for earlier years |
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Appeal rights |
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Appendix 1: The Schedule 36 Notices as varied |
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Appendix 2: Legislative provisions |
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DECISION
3. The issues in the case were:
(1) whether the case should be stayed pending the preliminary hearing which is to be listed for Gold Nuts Limited and others v HMRC; and if not
(2) whether Mr Mathew had appealed the Sch 36 Notices to HMRC as required by Sch 36, para 32;
(3) if so, whether the Tribunal should confirm, vary or set aside the Sch 36 Notices; and
(4) whether the Tribunal should issue a direction that HMRC close one or more of the SA enquiries.
5. The Tribunal decided that the case should not be stayed, for the reasons given at §35ff.
9. The relevant legislation is set out as Appendix 2 to this decision.
10. The Tribunal was provided with a Bundle of documents prepared by HMRC, which included:
(1) the correspondence between the parties, including various documents provided by Mr Mathew in response to the first Sch 36 Notice;
(2) the correspondence between the parties and the Tribunal;
(3) the SA return summaries for Mr Mathew, showing the dates on which his returns were filed for the relevant years; and
(4) tax calculations for each of the relevant years, prepared by HMRC.
TABLE 1 |
||||||
Tax Year |
Total income before PA |
Total income after PA |
Tax |
Date of Notice |
Date Filed |
Date enquiry opened |
2008-09 |
£129,524 |
£123,489 |
£42,709 |
31/5/12 |
30/3/13 |
18/3/14 |
2009-10 |
£45,217 |
£38,742 |
£8,160 |
4/6/13 |
7/1/14 |
18/3/14 |
2010-11 |
£46,030 |
£39,555 |
£8,342 |
4/6/13 |
7/1/14 |
18/3/14 |
2011-12 |
£13,626 |
£6,151 |
£1,230 |
4/6/13 |
7/1/14 |
13/3/14 |
2012-13 |
£8,105 |
£466 |
£93 |
4/6/13 |
26/1/14 |
18/3/14 |
18. All the enquiries were opened within the statutory time limits.
TABLE 2 |
||
No. |
Item |
Agreed provided? |
1 |
Addresses of rental properties and certain details |
Yes |
2 |
Schedule of [rental] income and expenditure |
Yes |
3 |
Schedule of any shares held in any entities, including as a nominee or in another name, showing name and address of entity, date and cost of acquisition, date and value of sale. This list should include interests in partnerships and joint ventures |
In part |
4 |
Schedule of any benefits or loans received because of Mr Mathew’s position in an entity, such as a director, shareholder, partner, employee or nominee |
No |
5 |
For each director’s loan account, a chronological breakdown with narrative description for amounts received |
In part |
|
Details and evidence to support any repayments made on these loans, including bank statements showing the payments made |
In part |
6 |
All bank and/or building society books or statements, cheque book stubs, and deposit book counterfoils (“bank statements etc”) from any account into which Mr Mathew received his employment income and into which he received income from or made payments to a director’s loan account |
In part |
7 |
For any personal assets on which there is a charge such as a mortgage or loan, the loan agreements and/or mortgage statements which cover the whole period, and the bank and/or building society books or statements from which these payments were made for the period |
In part |
8 |
Bank statements etc for any account into which any income from, or expenditure of, the property business is paid |
Yes |
9-10 |
Rent books and tenancy agreements |
Yes |
11 |
Housing benefit slips |
Yes |
12 |
Expense invoices [related to the property business] |
Yes |
TABLE 3 |
|
2011-12 |
|
No. |
Item |
1 |
Employment/director contracts between Mr Mathew and any/all of seven named companies |
2 |
Loan agreements between Mr Mathew and (a) BBL and (b) Noviscom |
3 |
Supporting documents for the credit balance with BBL |
4 |
Specified information about the disposal of a property at Stanmore Hill, Middlesex |
5 |
All bank accounts etc held in own name or jointly |
6 |
A schedule of any rental income from the property at Stanmore Hill, including the name and address of any tenant |
7 |
State whether the Stanmore Hill property was disposed of to a connected party |
8 |
Explanation of some thirty deposits in Mr Mathew’s bank account, which had been extracted from the bank statements provided in response to the First Notice. |
9 |
Explanation of the opening credit balance which Mr Mathew said was owed by BBL to him of £31, 458. |
2012-13 |
|
1 |
Any employment/director contracts between Mr Mathew and 13 named companies |
2 |
All bank accounts etc held in own name or jointly |
3 |
For each loan account held with a company, a detailed and chronological breakdown with narrative description for amounts received, opening and closing balances, and movements during the period including any repayments, evidenced by bank statements |
“would like to formally lodge a complaint on the basis that this investigation is retaliatory in nature and based upon the numerous complaints made against the HMRC by the group company Gold Nuts Limited, of which I am a director…Any further information will need to be requested by HMRC under direction from the First-tier Tribunal…I will request a formal reference of complaint against your conduct and that of your department in starting this investigation as you are abusing the legislative powers.”
PRELIMINARY MATTERS
Submissions of the parties
Discussion and decision
The law
“If a party has failed to comply with a requirement in these Rules, a practice direction or a direction, the Tribunal may take such action as it considers just, which may include:
(a) waiving the requirement…”
The position in this case
(1) it explicitly stated that it was a complaint;
(2) it made no reference to the First Notice at all, still less to appealing against that Notice;
(3) it crossed with the Second Notice, so could not be an appeal against that Notice; and
(4) when Mr Straughair replied to the letter, he said “I am treated this as a letter of complaint.” Had Mr Mathew wanted it to be treated as an appeal, he could have responded by saying that the purpose of his letter had been misunderstood. But he did not do so.
RECORDS, PROOF AND SUBMISSIONS
Statutory records
The legislation
Can “information” be a statutory record?
For how long must statutory records be preserved?
(1) 31 January 2014; and
(2) the date on which any enquiries into the 2011-12 SA return are closed.
“shall preserve those records until the end of the relevant day, that is to say, the day which, if the notice had been given on or before [the second 31 January], would have been the relevant day for the purposes of subsection (1) above”
Are any of the documents/information statutory records?
The burden of proof
The “reasonably required” test
66. Mr Onalaja submitted that HMRC had the burden of showing that the information and documents contained in the Sch 36 Notices were “reasonably required.” He relied on Kevin Betts v HMRC [2013] UKFTT 430 (TC) (Judge Perez and Ms Stalker) (“Kevin Betts”) where the tribunal recorded at [14] that it was “common ground” that the burden of proof was on HMRC.
Case law on Sch 36 and precursor provision
68. We reviewed the case law. The tribunal in Eudora Thompson v HMRC [2013] UKFTT 103(TC) (Judge Brannan and Mr Williams) said at [62] that “the onus of proof in relation to an appeal against an information notice lies on HMRC.” But, as in Kevin Betts, there appeared to be no argument to the contrary.
69. We could find no decisions of the Upper Tribunal or the courts which have considered this issue in the context of Sch 36 Notices provided to the taxpayer. There is, however, case law on “without notice” or ex parte notices. These are notices given to third parties, such as banks, with the approval of the tribunal, without the taxpayer attending the hearing and sometimes without the taxpayer knowing that the application is being made, see Sch 36 para 3(3). One of the statutory requirements for such a notice is that the tribunal must be “satisfied that, in the circumstances, the officer giving the notice is justified in doing so,” see Sch 36 para 3(3)(b). If the third party wishes to challenge the Notice, the only route is via judicial review, because no appeal is possible, see Sch 36, para 29(3).
70. In R (oao) Derrin Brother Properties Ltd v HMRC [2014] EWHC 1152 (Admin) (“Derrin”) the High Court dismissed a judicial review application against ex parte notices issued to a number of banks and others about their clients’ affairs. Simler J said at [14] that the question of whether documents or information were reasonably required for the purpose of checking a taxpayer’s position “depends on the conclusion of the officer, which must be justified in the circumstances” and that the Tribunal must also be satisfied “that the officer holds the relevant opinion.” She goes on to say at [15] that:
“[15] A number of further matters in relation to third party notices of this kind are well established by reference to the predecessor s. 20 TMA 1970 scheme and apply with equal force to Sch.36 notices, as the parties agreed. First, and significantly, as held in R v Commissioners of Inland Revenue ex parte T C Coombs & Company [1991] 2 AC 283 [Coombs], 300C-F, 302E-F (Lord Lowry) the Tribunal is the independent person designated by Parliament with the duty of supervising the exercise of HMRC’s intrusive powers. Parliament designated the officer as the decision-maker and the Tribunal as the monitor of the decision. A presumption of regularity applies to both, and is strong in relation to the Tribunal in particular.
[16] Accordingly, in challenging a third party notice, what must be proved are facts which are inconsistent or irreconcilable with the authorised officer’s conclusion that documents are reasonably required for checking the taxpayer’s tax position and the Tribunal being satisfied that the officer is justified in the circumstances in giving that notice. The resolution of this question will usually depend on confidential information or evidence which is not before the court on judicial review. The Tribunal, able to receive such confidential information or evidence in an ex parte hearing, is therefore in a much better position to make a proper appraisal of it than this court on judicial review. The fact that the Tribunal, having heard an application, approved the giving of the notice is therefore evidence which the court should take account of in this respect, not least since the Tribunal’s approval is the real and intended safeguard in the statutory scheme.”
“What they [the appellants] need to do is prove facts which are inconsistent (or irreconcilable) with the inspector's having had a reasonable (not necessarily a correct) opinion when he gave the second notice that the applicants had documents relating to the six companies which contained or might contain information relevant to any tax liability to which the taxpayer was or might be or might have been subject.”
73. There are, however, two differences between Derrin and Coombs on the one hand, and Mr Mathew’s case on the other, and we now consider whether they change the position. The first is that in Derrin and Coombs the courts were considering applications for judicial review whereas our task is whether or not to allow an appeal against the notices. The second is that the notices in both Derrin and Coombs were approved by the tribunal before being issued.
74. A decision can only be overturned on judicial review if it is found to be illegal, unreasonable, or procedurally flawed. Judicial review is not the same as an appeal. In an application for judicial review, the burden is always on the applicant.
75. On our analysis of both Derrin and Coombs, the courts found that the burden was on the appellants because of the presumption of regularity which applied to the making of the decision in the first place, and not because the appellant always has the burden in judicial review proceedings.
Notices issued without the tribunal’s prior approval
“Parliament designated the inspector as the decision-maker and also designated the commissioner as the monitor of the decision. A presumption of regularity applied to both…the presumption that the inspector acted intra vires when giving the notice can only be displaced by evidence which cannot be reconciled with the inspector's having had the required reasonable opinion.”
“Have the applicants proved that when giving the second notice the inspector's opinion that there remained in the applicants' power or possession relevant documents which they had not disclosed was not reasonable?”
Concluding remarks on burden of proof in relation to “reasonably required”
“it is the taxpayer who knows and the taxpayer who is in a position (or, if not in a position, who certainly should be in a position), to provide the right answer, and chapter and verse for the right answer.”
84. If the burden of proof in relation to the “reasonably required” test rests on the appellant, then a similar rationale could be put forward: it is the taxpayer who knows the relevance of information or documents to his tax position, because he knows the full facts. This analysis is also consistent with the objective of Sch 36 taken as a whole, which is “to ensure that the information which will ensure that the correct amount of tax can be determined,” see HMRC v Tager [2015] UKUT 40 (TCC) at [16], per Judge Bishopp.
Burden of proof in relation to “statutory records”
The parties’ main submissions
Reasonably required?
95. Mr Straughair responded by saying that HMRC had a duty to make assessments to the best of its judgement, and that he currently had insufficient information to make the assessments. The information and documents in the Notices were, in his submission, reasonably required for the purposes of establishing Mr Mathew’s tax position.
Fishing expedition?
Retaliatory action?
Our approach
(1) whether they were “statutory records” against which no appeal is possible;
(2) whether Mr Mathew had complied with the requirements; and if not
(3) whether information or documents which were not statutory records were “reasonably required” for the purposes of checking Mr Mathew’s tax position.
THE FIRST NOTICE
Item 3: Schedule of interests
The Notice, correspondence and submissions
101. Item 3 of the First Notice is that Mr Mathew provide:
“A Schedule of any shares held in any entities, both within the UK and overseas at any time during the period, even if you hold them as nominee or in another name. The name and address of the entity should be provided, along with the date and cost( if any) of acquisition. If any disposals have been made during the year, please provide the date and value of sale. As an example this list should include (but not be limited to) interests in companies, partnerships and joint ventures).”
Schedule of interests: statutory records?
Schedule of interests: compliance by Mr Mathew?
Schedule of interests: reasonably required?
Schedule of interests: decision
Item 4: Benefits in kind other than loans
The Notice, correspondence and submissions
Benefits other than loans: decision
Items 4 and 5: Loans
The Notice and correspondence
121. Items 4 and 5 of the Notice require:
(1) a Schedule of any benefits or loans received because of Mr Mathew’s position in an entity, such as a director, shareholder, partner, employee or nominee (Item 4);
(2) for each director’s loan account, a chronological breakdown with narrative description for amounts received (Item 5);
(3) details and evidence to support any repayments made on these loans, including bank statements showing the payments made (Item 5).
125. In Mr Gupta’s second letter of 30 May 2014, he said that:
“the loans were received directly by bank transfer from Blackbay Ventures Ltd (“BBL”). The loans were from BBL and not Gold Nuts Ltd as referred to in our previous letter. The other loan was received directly by bank transfer from Noviscom. These loans were merely cash loans for Mr J Mathew’s personal use.”
126. On 12 June 2014 Mr Straughair wrote to Mr Gupta, saying:
“I will need sight of each Director’s Loan Account (“DLA”) with each company held by your client. I would expect each DLA to have an opening and closing balance and show all movements within the period. I have also asked for a narrative breakdown but that has not been provided. I would expect this to describe the nature of the payment and how it was paid, for example were the debits made by cash or by bank payments and what was the purpose of each payment. A DLA is a statutory document and I still consider Item 5 of the schedule of information and documents is outstanding.”
129. Below the list are the following items, headed “Repayment”:
Month/Yr |
|
Date paid |
|
Explanation |
Dec 11 |
£50,000 |
29/12/11 |
CHAPS |
Loan repayment |
June 11 |
£610 |
30/6/11 |
|
Undrawn salary credited |
Jan 12 |
114 |
30/1/12 |
CHAPS |
Expenses paid on behalf of company |
Total |
50,724 |
|
|
|
131. Mr Gupta’s covering letter said:
“you will now note from the further information provided in this letter that our client borrowed c £91k during the period for his living expenses. This should now explain how our client funded his living.”
134. On 11 July 2014 Mr Straughair wrote setting out his concerns in more detail. These were that:
(1) the source of the credit balance owed to Mr Mathew from BBL i.e., why BBL owed money to Mr Mathew;
(2) BBL’s accounts as filed with HMRC show the loan as non-interest bearing;
(3) given that the loans were to fund living expenses, they have the hallmark of remuneration, so what assurances did Mr Mathew provide to the companies that the loans would be repaid;
(4) how all the loans with the companies have been treated, given that Mr Mathew received this money from a company of which he was neither an employee nor a director.
Loans: statutory records?
Loans: decision
Item 6: Bank accounts
142. Item 6 required that Mr Mathew provide:
“All bank and/or BS books or statements, cheque book stubs, and deposit book counterfoils [“bank statements etc”] from any account into which he received his employment income and into which he had received income from or made payments to a director’s loan account.”
Bank accounts: decision
Item 7: charges on personal assets
Decision on the First Notice
150. We therefore vary the First Notice as follows:
(1) Items 1, 2, 8, 9, 10, 11 and 12 have been removed entirely on the basis that they have been complied with;
(2) Item 6 has been removed entirely as it is subsumed into Item 5 of the Second Notice (2011-12);
(3) Items 3, 4, 5 and 7 have been varied on the bases explained above.
151. The Notice, as varied, is set out in Appendix 1.
THE SECOND NOTICE
The Second Notice (2011-12)
Item 1: Employment/director contracts
(1) the four companies in which Mr Mathew has said he has a business interest;
(2) Venture Pharmacy Limited, the company identified as Mr Mathew’s employer in his SA return;
(3) two other companies which we understand to be part of the Gold Nuts group, Dispensary Holdings Ltd and Leyton Orient Dispensary Ltd.
Item 2: Loan agreements
(1) Mr Straughair said that he wants to establish in particular whether the loans are interest bearing, and
(2) their repayment terms.
(1) the conflict between the BBL’s statutory accounts (which show that the loans are non-interest bearing), and the Schedule attached to Mr Gupta’s letter of 30 May, which show interest added to the loan balance;
(2) the original information provided by Mr Gupta that the loans totalling £93,261 made by way of regular monthly payments were from Gold Nuts, and the subsequent letter correcting that;
(3) the use of a loan from Noviscom to repay a loan from BBL; and
(4) Mr Gupta’s statement that the loans are used for Mr Mathew’s living expenses.
Items 3 and 9: Credit balance with BBL
Items 4, 6 and 7 Disposal of property at Stanmore Hill
Item 5: Bank Accounts
Conclusion on the Second Notice (2011-12)
(1) If there are no formal contracts between Mr Mathew and any one or more of the companies in Item 1, then he is to provide a list of all companies of which he was either an employee or a director, or both, during the year (Item 10); and
(2) If there are no formal loan agreements between Mr Mathew and either or both of Noviscom and BBL, he is to provide a formal statement as to whether the loans are (a) interest bearing and (b) whether there are any arrangements in place for repayment, together with supporting evidence for both (a) and (b)
The Second Notice (2012-13)
180. This part of the Notice required the production of three Items:
(1) copies of employment contracts with thirteen named companies;
(2) bank statements etc for all personal and business bank accounts in Mr Mathew’s own name or jointly;
(3) specified information about all loan accounts.
CONCLUSIONS ON THE SCH 36 NOTICES AND DIRECTION
“HMRC may not use their Sch.36 powers for a fishing expedition – whether for their own or the purposes of another revenue authority. A broadly-drafted request will not be valid if in reality HMRC are saying “can we have all available documents because they form so large a class of documents that we are bound to find something useful”. What is required is that the request is genuinely directed to the purpose for which the notice may be given, namely to secure the production of documents reasonably required for carrying out an investigation or enquiry of any kind into another taxpayer’s tax position. It is no objection however, to the issue of a third party notice that it seeks disclosure of ‘conjectural’ documents; in other words documents that might not exist: R v Commissioners of Inland Revenue ex parte Ulster Bank Ltd [1997] STC 832, 841f-h (Morritt LJ).”
187. Mr Onalaja also submitted that HMRC were abusing their powers. This tribunal does not have a judicial review jurisdiction, so this is not a matter we can take decide, or take into account as part of the appeal. However, for completeness we record that there was no evidence before us to support a submission that that Mr Mathew is being improperly investigated in retaliation for challenges made to HMRC by the parties to the Gold Nuts litigation. Although Mr Straughair is part of Special Investigations, that fact, of itself, takes us nowhere. He told us, and we accepted, that his enquiry came about because he identified a gap between Mr Mathew’s income and his lifestyle. That this is true has been accepted by Mr Gupta and Mr Onalaja and is reflected in his disclosed earnings and his bank statements. We have found that the Items contained within the Sch 36 Notices were “reasonably required” in the context of Mr Straughair’s concerns about his means and the information so far provided to HMRC. In short, we found no foundation for the submission that HMRC were abusing their powers by enquiring into Mr Mathew’s SA returns.
THE CLOSURE NOTICE APPLICATIONS
The law on closure notices
191. In issuing a closure notice an officer is performing an important public function in which fairness to the taxpayer must be matched by a proper regard for the public interest in the recovery of the full amount of tax payable, see Tower MCashback v HMRC [2011] STC 1143 (“Tower”), per Lord Walker at [18]. Lord Hope, in the same case, said at [83] that the closure notice should be “as informative as possible” because it will serve the function of identifying the subject matter of any appeal.
193. We also considered Stephen Price v HMRC [2011] UKFTT 624(TC) (Judge Mosedale and Mr Hughes), where the appellant had submitted that the enquiry could be closed and an estimated assessment made. The tribunal said that while HMRC has the power to issue such assessments:
“HMRC is entitled to know the full facts related to a person's tax position so that they can make an informed decision whether and what to assess. It is clearly inappropriate and a waste of everybody's time if HMRC are forced to make assessments without knowledge of the full facts. The statutory scheme is that HMRC are entitled to full disclosure of the relevant facts: this is why they have a right to issue (and seek the issue of) information notices seeking documents and information reasonably required for the purpose of checking a tax return (see Schedule 36 of Finance Act 2008).”
Submissions on the closure notices for 2011-12 and 2012-13
“I accept the submission by Mr Maas that the Revenue do not have to be satisfied in order to state their conclusions. If they are not satisfied, this will be part of the conclusion; in such a case the closure notice will go on to make a judgment as to what the correct figure should be. Such judgment will be on the same basis as on a discovery assessment under s 29. Although it may be possible in some cases to state a figure with confidence, for example if an identified income receipt has been omitted or if specific expenditure is disallowed, in many cases no precision will be possible. The measure of profits is often a matter of judgment.”
Decision on the closure notices for 2011-12 and 2012-13
197. We agree with Mrs Naylor. It is clear from the volume of information and documents which have not yet been supplied by Mr Mathew that it would be premature to issue a closure notice with immediate effect, which is what Mr Mathew has asked us to do. This is not a situation where HMRC is seeking to “pursue to the end” every line of enquiry, as in Eclipse. Neither is it one where HMRC can simply exercise judgement as to the correct figure, as in Jade Palace, or issue alternative assessments, as in D’Arcy. If we directed that HMRC close the enquiry now, it would put them in the position of being “forced to make assessments without knowledge of the full facts” as the tribunal put it in Stephen Price.
200. Mr Mathew ended his witness statement by saying that:
“…if the Tribunal come to the conclusion that such information is required as per the reasons given by the HMRC then I would have no objection to provide the same as long as the HMRC provides me with a timeframe within which such checks will be completed.”
The closure notice applications for the earlier years
Full decision and appeal rights
208. This document contains full findings of fact and reasons for the decision.
APPENDIX 1: THE SCHEDULE 36 NOTICES
THE FIRST NOTICE AS VARIED |
|
No. |
Item |
3a |
Schedule of any shares held by you in any entities, both within the UK and overseas at any time during the period, other than those provided in the letter of 9 May 2014, including (a) held by you as nominee for someone else and (b) those held in another name where you are the beneficial owner. The name and address of each entity must be provided, along with the date and cost (if any) of acquisition. If any disposals have been made, provide the date and value of sale. Also provide a statement that Schedule is a complete and accurate list of all shareholdings beneficially owned by you at any time during the tax year. |
3b |
Schedule of any interests in any partnership, limited partnership, limited liability partnership or joint venture, whether in the UK or overseas at any time during the tax year, showing the name and address of the entity, date and cost of acquisition, date and value of sale and any other changes in your interest during the year. This Schedule must include any such interests (a) held by you as nominee for someone else and (b) those held in another name where you are the beneficial owner. The Schedule must be accompanied by a statement that it contains a complete and accurate list of all such interests beneficially owned by you at any time during the tax year. |
4a |
Confirmation whether the loans from BBL and Noviscom disclosed to HMRC is a complete and correct list of all loans from any entity with which you are connected, and if not, a further Schedule of loans received because of your position in an entity, such as a director, shareholder, partner, employee or nominee |
4b |
An explanation of the basis on which you were loaned money by BBL |
5a |
If any further loan account is disclosed in response to Item 4a, a chronological breakdown with narrative description for amounts received and details and evidence to support any repayments made on these loans, including bank statements evidencing the payments and any repayments. |
7 |
For any personal assets on which there is a charge such as a mortgage or loan, provide the loan agreements and/or mortgage statements which cover the whole period. Provide the bank and/or building society books or statements from which you make these payments for the period. |
THE SECOND NOTICE AS VARIED |
|
2011-12 |
|
No. |
Item |
1 |
Employment and/or director contracts between you and the companies named in Item 1 of the Second Notice issued on 13 August 2014 |
2 |
Loan agreements between you and (a) BBL and (b) Noviscom |
3 |
Supporting documentation for the credit balance with BBL |
4 |
Specified documentation about the disposal of the property at Stanmore Hill, Middlesex as set out at in the Second Notice issued on 13 August 2014 |
5 |
All bank and/or building society books or statements, cheque book stubs, and deposit book counterfoils for all personal and/or business bank accounts held in your own name or jointly |
6 |
A schedule of any rental income from the property at Stanmore Hill, including the name and address of any entity/individual renting the property |
7 |
State whether the Stanmore property was disposed of to a connected party |
8 |
Evidence for, and an explanation of, the bank receipts in the bank account, as set out at Annex 1 to the Second Notice issued on 13 August 2014 |
9 |
Explanation of the opening credit balance with BBL |
10 |
If there are no formal contracts between you and the companies in Item 1, provide a list of all companies of which you were either an employee or a director, of both, during the year. |
11 |
If there are no formal loan agreements between you and either or both of Noviscom and BBL, provide a formal statement as to whether the loans are (a) interest bearing and (b) whether there are any arrangements in place for repayment, together with supporting evidence for both (a) and (b). |
2012-12 |
|
1 |
Any employment/director contracts between you and the companies listed at Item 1 of the Second Notice issued on 13 August 2014 |
2 |
All bank and/or building society books or statements, cheque book stubs, and deposit book counterfoils for all personal and business bank and/or building society accounts held in your own name or jointly |
3 |
For each loan account held with a company, provide a detailed and chronological breakdown with narrative description for (a) amounts received and (b) all amounts repaid. The schedule must provide opening and closing balances, and itemise all movements during the period. Provide details and evidence to support any repayments made to these loans including bank statements showing the payments made. |
4 |
If there are no formal contracts between you and any one or more of the companies in Item 1, provide a list of all companies of which you were either an employee or a director, or both, during the year. |
5 |
If there are no formal loan agreements between you and either or both of Noviscom and BBL, provide a formal statement as to whether the loans are (a) interest bearing and (b) whether there are any arrangements in place for repayment, together with supporting evidence for both (a) and (b). |
APPENDIX 2: LEGISLATION
TAXES MANAGEMENT ACT 1970
1 Responsibility for certain taxes
The Commissioners for Her Majesty's Revenue and Customs shall be responsible for the collection and management of—
(a) income tax,
(b) corporation tax, and
(c) capital gains tax.
12B Records to be kept for purposes of returns
(1) Any person who may be required by a notice under section 8, 8A or 12AA of this Act to make and deliver a return for a year of assessment or other period shall—
(a) keep all such records as may be requisite for the purpose of enabling him to make and deliver a correct and complete return for the year or period; and
(b) preserve those records until the end of the relevant day, that is to say, the day mentioned in subsection (2) below or, where a return is required by a notice given on or before that day, whichever of that day and the following is the latest, namely—
(i) where enquiries into the return are made by an officer of the Board, the day on which, by virtue of section 28A(1) or 28B(1) of this Act, those enquiries are completed; and
(ii) where no enquiries into the return are so made, the day on which such an officer no longer has power to make such enquiries.
(2) The day referred to in subsection (1) above is—
(a) in the case of a person carrying on a trade, profession or business alone or in partnership or a company…;
(b) otherwise, the first anniversary of the 31st January next following the year of assessment
or (in either case) such earlier day as may be specified in writing by the Commissioners for Her Majesty's Revenue and Customs (and different days may be specified for different cases).
(2A) Any person who—
(a) is required, by such a notice as is mentioned in subsection (1) above given at any time after the end of the day mentioned in subsection (2) above, to make and deliver a return for a year of assessment or other period; and
(b) has in his possession at that time any records which may be requisite for the purpose of enabling him to make and deliver a correct and complete return for the year or period,
shall preserve those records until the end of the relevant day, that is to say, the day which, if the notice had been given on or before the day mentioned in subsection (2) above, would have been the relevant day for the purposes of subsection (1) above.
28A Completion of enquiry into personal or trustee return
(1) An enquiry under section 9A(1) of this Act is completed when an officer of the Board by notice (a "closure notice") informs the taxpayer that he has completed his enquiries and states his conclusions.
In this section "the taxpayer" means the person to whom notice of enquiry was given.
(2) A closure notice must either—
(a) state that in the officer's opinion no amendment of the return is required, or
(b) make the amendments of the return required to give effect to his conclusions.
(3) A closure notice takes effect when it is issued.
(4) The taxpayer may apply to the tribunal for a direction requiring an officer of the Board to issue a closure notice within a specified period.
(5) Any such application is to be subject to the relevant provisions of Part 5 of this Act (see, in particular, section 48(2)(b)).
(6) The tribunal shall give the direction applied for unless satisfied that there are reasonable grounds for not issuing a closure notice within a specified period.
…
48 Application to appeals and other proceedings
(1) In the following provisions of this Part of this Act, unless the context otherwise requires—
(a) "appeal" means any appeal under the Taxes Acts;
(b) a reference to notice of appeal given, or to be given, to HMRC is a reference to notice of appeal given, or to be given, under any provision of the Taxes Acts.
(2) In the case of—
(a) an appeal other than an appeal against an assessment, the following provisions of this Part of this Act shall, in their application to the appeal, have effect subject to any necessary modifications, including the omission of sections 54A to 54C and 56 below;
(b) any proceedings other than an appeal which, under the Taxes Acts, are to be subject to the relevant provisions of this Part of this Act, the relevant provisions—
(i) shall apply to the proceedings as they apply to appeals;
(ii) but shall, in that application, have effect subject to any necessary modifications, including (except in the case of applications under section 55 below) the omission of section 56 below.
(3) In subsection (2), a reference to the relevant provisions of this Part of this Act is a reference to the following provisions of this Part, except sections 49A to 49I and 54A to 54C.
49 Late notice of appeal
(1) This section applies in a case where—
(a) notice of appeal may be given to HMRC, but
(b) no notice is given before the relevant time limit.
(2) Notice may be given after the relevant time limit if—
(a) HMRC agree, or
(b) where HMRC do not agree, the tribunal gives permission.
(3) If the following conditions are met, HMRC shall agree to notice being given after the relevant time limit.
(4) Condition A is that the appellant has made a request in writing to HMRC to agree to the notice being given.
(5) Condition B is that HMRC are satisfied that there was reasonable excuse for not giving the notice before the relevant time limit.
(6) Condition C is that HMRC are satisfied that request under subsection (4) was made without unreasonable delay after the reasonable excuse ceased.
(7) If a request of the kind referred to in subsection (4) is made, HMRC must notify the appellant whether or not HMRC agree to the appellant giving notice of appeal after the relevant time limit.
(8) In this section "relevant time limit", in relation to notice of appeal, means the time before which the notice is to be given (but for this section).
49A Appeal: HMRC review or determination by tribunal
(1) This section applies if notice of appeal has been given to HMRC.
(2) In such a case—
(a) the appellant may notify HMRC that the appellant requires HMRC to review the matter in question (see section 49B),
(b) HMRC may notify the appellant of an offer to review the matter in question (see section 49C), or
(c) the appellant may notify the appeal to the tribunal (see section 49D)…
49B-49C …
49D Notifying appeal to the tribunal
(1) This section applies if notice of appeal has been given to HMRC.
(2) The appellant may notify the appeal to the tribunal.
(3) If the appellant notifies the appeal to the tribunal, the tribunal is to decide the matter in question.
50 Procedure
(1)–(5) …
(6) If, on an appeal notified to the tribunal, the tribunal decides—
(a) that the appellant is overcharged by a self-assessment;
(b) that any amounts contained in a partnership statement are excessive; or
(c) that the appellant is overcharged by an assessment other than a self-assessment,
the assessment or amounts shall be reduced accordingly, but otherwise the assessment or statement shall stand good.
FINANCE ACT 2008, SCHEDULE 36
1 Power to obtain information and documents from taxpayer
(1) An officer of Revenue and Customs may by notice in writing require a person ("the taxpayer")—
(a) to provide information, or
(b) to produce a document,
if the information or document is reasonably required by the officer for the purpose of checking the taxpayer's tax position.
(2) In this Schedule, "taxpayer notice" means a notice under this paragraph....
....
3. Approval etc of taxpayer notices and third party notices
(1) An officer of Revenue and Customs may not give a third party notice without—
(a) the agreement of the taxpayer, or
(b) the approval of the tribunal.
(2) An officer of Revenue and Customs may ask for the approval of the tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)).
(2A) An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (3)).
(3) The tribunal may not approve the giving of a taxpayer notice or third party notice unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,
(b) the tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,
(c) the person to whom the notice is to be addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs,
(d) the tribunal has been given a summary of any representations made by that person, and
(e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents.
(4) Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax.
(5) Where the tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax.
….
6 Notices
(1) In this Schedule, "information notice" means a notice under paragraph 1, 2 or 5.
(2) An information notice may specify or describe the information or documents to be provided or produced
7. Complying with notices
(1) Where a person is required by an information notice to provide information or produce a document, the person must do so—
(a) within such period, and
(b) at such time, by such means and in such form (if any),
as is reasonably specified or described in the notice.
…
21. Taxpayer notices following tax return
(1) Where a person has made a tax return in respect of a chargeable period under section 8, 8A or 12AA of TMA 1970 (returns for purpose of income tax and capital gains tax), a taxpayer notice may not be given for the purpose of checking that person's income tax position or capital gains tax position in relation to the chargeable period.
(2) Where a person has made a tax return in respect of a chargeable period under paragraph 3 of Schedule 18 to FA 1998 (company tax returns), a taxpayer notice may not be given for the purpose of checking that person's corporation tax position in relation to the chargeable period.
(3) Sub-paragraphs (1) and (2) do not apply where, or to the extent that, any of conditions A to D is met.
(4) Condition A is that a notice of enquiry has been given in respect of—
(a) the return, or
(b) a claim or election (or an amendment of a claim or election) made by the person in relation to the chargeable period in respect of the tax (or one of the taxes) to which the return relates ("relevant tax"),
and the enquiry has not been completed.
(5) In sub-paragraph (4), "notice of enquiry" means a notice under—
(a) section 9A or 12AC of, or paragraph 5 of Schedule 1A to, TMA 1970, or
(b) paragraph 24 of Schedule 18 to FA 1998.
(6) Condition B is that an officer of Revenue and Customs has reason to suspect that, as regards the person,—
(a) an amount that ought to have been assessed to relevant tax for the chargeable period may not have been assessed,
(b) an assessment to relevant tax for the chargeable period may be or have become insufficient, or
(c) relief from relevant tax given for the chargeable period may be or have become excessive.
(7) Condition C is that the notice is given for the purpose of obtaining any information or document that is also required for the purpose of checking the person's position as regards any tax other than income tax, capital gains tax or corporation tax.
(8) Condition D is that the notice is given for the purpose of obtaining any information or document that is required (or also required) for the purpose of checking the person's position as regards any deductions or repayments of tax or withholding of income referred to in paragraph 64(2) or (2A) (PAYE etc).
(9) In this paragraph, references to the person who made the return are only to that person in the capacity in which the return was made.
….
29 Right to appeal against taxpayer notice
(1) Where a taxpayer is given a taxpayer notice, the taxpayer may appeal against the notice or any requirement in the notice.
(2) Sub-paragraph (1) does not apply to a requirement in a taxpayer notice to provide any information, or produce any document, that forms part of the taxpayer's statutory records.
(3) Sub-paragraph (1) does not apply if the tribunal approved the giving of the notice in accordance with paragraph 3.
….
32 Procedure
(1) Notice of an appeal under this Part of this Schedule must be given—
(a) in writing,
(b) before the end of the period of 30 days beginning with the date on which the information notice is given, and
(c) to the officer of Revenue and Customs by whom the information notice was given.
(2) Notice of an appeal under this Part of this Schedule must state the grounds of appeal.
(3) On an appeal that is notified to the tribunal, the tribunal may—
(a) confirm the information notice or a requirement in the information notice,
(b) vary the information notice or such a requirement, or
(c) set aside the information notice or such a requirement.
(4) Where the tribunal confirms or varies the information notice or a requirement, the person to whom the information notice was given must comply with the notice or requirement—
(a) within such period as is specified by the tribunal, or
(b) if the tribunal does not specify a period, within such period as is reasonably specified in writing by an officer of Revenue and Customs following the tribunal's decision.
(5) Notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007 a decision of the tribunal on an appeal under this Part of this Schedule is final.
(6) Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Part of this Schedule as they have effect in relation to an appeal against an assessment to income tax.
….
62 Statutory records
(1) For the purposes of this Schedule, information or a document forms part of a person's statutory records if it is information or a document which the person is required to keep and preserve under or by virtue of—
(a) the Taxes Acts, or
(b) any other enactment relating to a tax,
subject to the following provisions of this paragraph.
(2) To the extent that any information or document that is required to be kept and preserved under or by virtue of the Taxes Acts—
(a) does not relate to the carrying on of a business, and
(b) is not also required to be kept or preserved under or by virtue of any other enactment relating to a tax,
it only forms part of a person's statutory records to the extent that the chargeable period or periods to which it relates has or have ended.
(3) Information and documents cease to form part of a person's statutory records when the period for which they are required to be preserved by the enactments mentioned in sub-paragraph (1) has expired.
TRIBUNAL PROCEDURE (FIRST-TIER TRIBUNAL) (TAX CHAMBER) RULES 2009
7 Failure to comply with rules etc
(1) An irregularity resulting from a failure to comply with any requirement in these Rules, a practice direction or a direction does not of itself render void the proceedings or any step taken in the proceedings.
(2) If a party has failed to comply with a requirement in these Rules, a practice direction or a direction, the Tribunal may take such action as it considers just, which may include--
(a) waiving the requirement…
20 Starting appeal proceedings
(1) A person making or notifying an appeal to the Tribunal under any enactment must start proceedings by sending or delivering a notice of appeal to the Tribunal.
(2) The notice of appeal must include--
(a) the name and address of the appellant;
(b) the name and address of the appellant's representative (if any);
(c) an address where documents for the appellant may be sent or delivered;
(d) details of the decision appealed against;
(e) the result the appellant is seeking; and
(f) the grounds for making the appeal.
(3) The appellant must provide with the notice of appeal a copy of any written record of any decision appealed against, and any statement of reasons for that decision, that the appellant has or can reasonably obtain.
(4) If the notice of appeal is provided after the end of any period specified in an enactment referred to in paragraph (1) but the enactment provides that an appeal may be made or notified after that period with the permission of the Tribunal--
(a) the notice of appeal must include a request for such permission and the reason why the notice of appeal was not provided in time; and
(b) unless the Tribunal gives such permission, the Tribunal must not admit the appeal.
(5) When the Tribunal receives the notice of appeal it must give notice of the proceedings to the respondent.