Jonathan Hitchins & Ors. v The Commissioners for HMRC
[2023] UKFTT 127 (TC)
Apsley Way Property Holdings Limited v The Commissioners for HMRC
24 October 2023
[2023] UKFTT 907 (TC)
First-tier Tribunal
A company, AWPH, argued that HMRC was asking for too much information and wanted the tax investigation closed. The judge agreed with some of AWPH's arguments and said some information wasn't needed, but still refused to close the investigation because HMRC needed the rest of the information to decide if AWPH owed more or less tax.
Key Facts
- •Apsley Way Property Holdings Limited (AWPH Ltd), a BVI-registered company, appealed against two information notices issued by HMRC under Schedule 36 FA 2008 and applied for a closure notice under section 28A TMA 1970.
- •The information notices requested various documents and information related to AWPH Ltd's directors, a loan from its parent company, and the terms of its tenancy agreement.
- •HMRC's enquiry concerned AWPH Ltd's tax returns for the years ended 5 April 2018 and 5 April 2019.
- •AWPH Ltd argued that the requested information was not reasonably required for checking its tax position.
- •The Tribunal considered whether the information was reasonably required and whether there were reasonable grounds for not issuing a closure notice.
Legal Principles
Closure notice applications under section 28A TMA 1970 aim to protect taxpayers from inappropriately protracted enquiries, balancing HMRC's investigation powers with the taxpayer's protection against undue delay.
Beneficial House (Birmingham) Regeneration LLP & Anor v HMRC [2017] UKFTT 801 (TC)
Information notices under paragraph 1(1) Schedule 36 FA 2008 require that information or documents are reasonably required by HMRC for checking the taxpayer's tax position.
Joshy Mathew v HMRC [2015] UKFTT 139 (TC)
HMRC must show reasonable grounds for not issuing a closure notice, considering proportionality and the burden on the taxpayer. The longer the enquiry, the greater the burden on HMRC.
Jade Palace Limited v HMRC [2006] STC (SCD) 419
Information requests cannot be a 'fishing expedition' and must be objectively reasonable. The information must have a sufficient connection to the taxpayer's tax liability.
Derrin Brother Properties Ltd v HMRC [2014] EWHC 1152 (Admin)
Outcomes
Appeals against information notices partially allowed; some information was deemed not reasonably required.
The Tribunal found that some information requested in the information notices had already been provided, and other information was not reasonably required to check AWPH Ltd's tax position for the years under enquiry.
Application for a closure notice refused.
The Tribunal determined that HMRC needed the outstanding information to make a fully informed decision on AWPH Ltd's tax position. The enquiry should remain open until the information was provided.