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.