Gareth Evans v The Commissioners for HMRC
[2023] UKFTT 869 (TC)
Generator Power Limited v The Commissioners for HMRC
24 May 2024
[2024] UKFTT 458 (TC)
First-tier Tribunal
A company was asked by HMRC for information about property deals and legal fees. The company argued HMRC didn't need the information and didn't have a good reason to think there was missing tax. The judge decided HMRC did need the information to check the company’s taxes and that they had good reason to think there might be missing tax. The company must now give the information to HMRC.
Key Facts
- •Generator Power Ltd (GPL) appealed against an information notice issued by HMRC on 27 January 2020 under Schedule 36 of the Finance Act 2008.
- •The notice requested information regarding property transactions involving the transfer of properties from GPL to its sole director and shareholder, Mr. Cardwell.
- •HMRC suspected potential underassessment of tax due to various possible tax treatments of the property transactions and associated legal fees.
- •GPL argued the requested information was not reasonably required and that HMRC lacked sufficient reason to suspect tax underassessment.
- •The appeal concerned two issues: whether the information was reasonably required and whether HMRC had reason to suspect tax underassessment.
Legal Principles
An information notice is valid if the information or document is reasonably required for checking the taxpayer's tax position (Schedule 36, FA 2008).
Schedule 36, Finance Act 2008
Information is reasonably required if there is a sufficient connection between the information sought and the taxpayer's tax position, and the requirement is objectively reasonable. It is not a 'fishing expedition'.
Perfectos Printing Inks Co Ltd v HMRC [2019] UKFTT 388 (TC); Sherchan v HMRC [2016] UKFTT 134 (TC); Derrin Brother Properties Ltd v HMRC [2014] EWHC 1152 (Admin); Jenner v HMRC [2022] UKFTT 203 (TC)
HMRC must show, on the balance of probabilities, that the information is reasonably required and that Condition B of paragraph 21 of Schedule 36 FA 2008 is met (reason to suspect underassessment).
Holmes and Knight v HMRC [2018] UKFTT 678 (TC); Mathew v HMRC [2015] UKFTT 139 (TC); Hackmey v HMRC [2022] UKFTT 160 (TC); Cliftonville Consultancy Ltd v HMRC [2018] UKFTT 231 (TC)
A previous enquiry does not preclude HMRC from seeking further information if a different conclusion is reached, potentially leading to a discovery assessment.
Case Law (implied from the Tribunal's reasoning)
Outcomes
GPL's appeal was dismissed.
The Tribunal found that the requested information (Property Schedule and Legal Fees Schedule) was reasonably required to check GPL's tax position, and that HMRC had reason to suspect potential tax underassessment.
GPL was ordered to provide the outstanding information within 56 days of the decision.
The Tribunal confirmed the information notice's validity in relation to the outstanding information.