Andrew James Wilson v The Commissioners for HMRC
[2023] UKFTT 944 (TC)
RK Hosking v The Commissioners for HMRC
3 October 2023
[2023] UKFTT 943 (TC)
First-tier Tribunal
Someone got a tax penalty for not giving the tax office enough information about their finances. They tried to delay the case by saying some of their paperwork was invalid, but the judge said that didn't matter; the only question is whether they gave the right info in the first place. So, the case continues without delay.
Key Facts
- •HMRC imposed a £300 penalty on the Appellant for failing to provide information and documents requested under Schedule 36 Finance Act 2008 regarding a disguised remuneration trust (OSLRT).
- •The Appellant argued that the trust was void ab initio and that ongoing arbitral proceedings in the British Virgin Islands would determine the beneficial ownership of the assets.
- •HMRC contended that the validity of the trust was irrelevant to the penalty, as the information was reasonably required to check the Appellant's tax position.
- •The Appellant failed to comply with a formal information notice and subsequent review, leading to the penalty.
- •The Appellant appealed the penalty, and applied for a stay pending the outcome of the arbitral proceedings.
Legal Principles
HMRC can require a taxpayer to provide information or produce documents if reasonably required for checking their tax position (Schedule 36, Finance Act 2008).
Schedule 36, Finance Act 2008
A notice under Schedule 36 only requires production of documents within a person's possession or power.
Schedule 36, Finance Act 2008
Where HMRC gives notice of review conclusions, absent an appeal to the Tribunal, those conclusions are treated as a formal settlement (Section 49F, Taxes Management Act 1970).
Section 49F, Taxes Management Act 1970
In a penalty appeal under Schedule 36, the Tribunal's jurisdiction is limited to whether there was non-compliance with the notice and if there was a reasonable excuse. The validity of the information notice itself is not considered.
PML Accounting Ltd v HMRC [2017] EWHC 733 (Admin), Birkett v. Commissioners for Her Majesty’s Revenue and Customs [2017] UKUT 89 (TCC)
The test for a 'reasonable excuse' for non-compliance with an information notice involves establishing the facts, proving them, and determining objectively whether they provide a reasonable excuse.
Christine Perrin v HMRC [2018] UKUT 156 (TCC), William Archer v HMRC [2023] EWCA CIV 626
Outcomes
The Appellant's application for a stay was refused.
The validity of the OSLRT trust is irrelevant to the question of whether the Appellant complied with the information notice or had a reasonable excuse for non-compliance. The Tribunal lacks jurisdiction to consider the validity of the notice in a penalty appeal.