Surat Singh Sangha v The Commissioners for HMRC
[2024] UKFTT 564 (TC)
Furlong Services Ltd v The Commissioners for HMRC
25 July 2024
[2024] UKFTT 705 (TC)
First-tier Tribunal
HMRC suspected a company (Furlong) wasn't paying enough tax. They sent a request for information. A judge reviewed the request and said most of it was okay, but parts were too broad or covered periods where there wasn't enough evidence of tax evasion. The judge made the request clearer and more focused.
Key Facts
- •Furlong Services Ltd appealed against an HMRC information notice issued under Schedule 36 of the Finance Act 2008.
- •The notice requested information regarding Furlong's income, specifically focusing on income from football consultancy alongside its declared farming income.
- •HMRC suspected underassessment of tax due to inconsistencies in Furlong's accounts and tax computations, and the discovery of undisclosed football consultancy income.
- •The Tribunal considered whether the requested information was reasonably required and whether HMRC had sufficient reason to suspect underassessment.
- •The Tribunal also addressed whether certain items were statutory records, thus exempt from appeal.
Legal Principles
HMRC can issue an information notice if information or documents are reasonably required to check a taxpayer's tax position or collect a tax debt.
Finance Act 2008, Schedule 36, paragraph 1
An information notice cannot require production of documents originating more than 6 years before the notice date, unless issued by an authorized officer.
Finance Act 2008, Schedule 36, paragraph 20
There is no right of appeal against a requirement to produce statutory records.
Finance Act 2008, Schedule 36, paragraph 29(2)
Information or documents are statutory records if required to be kept and preserved under the Taxes Acts.
Finance Act 2008, Schedule 36, paragraph 62
HMRC must have reason to suspect tax underassessment to issue a notice for a period where a tax return has been filed.
Finance Act 2008, Schedule 36, paragraph 21(6)
Trading losses can only be carried forward to reduce profits from the same trade.
Corporation Tax Act 2010, section 45
Outcomes
Items 1, 4, and 7 of the information notice were confirmed.
These items were either statutory records or reasonably required to check Furlong's tax position for periods where HMRC had reason to suspect underassessment.
Items 2 and 5 were varied.
The scope was narrowed to focus on periods with reasonable suspicion of underassessment and to clarify the language for better understanding.