Martin Horsler v The Commissioners for HMRC
[2024] UKFTT 561 (TC)
Surat Singh Sangha v The Commissioners for HMRC
27 June 2024
[2024] UKFTT 564 (TC)
First-tier Tribunal
Mr. Sangha was sent a demand for information by the tax authorities. A judge reviewed the demand and threw out some parts, changed others to make them clearer, and told Mr. Sangha to provide the rest of the information. The ruling clarifies what the tax authorities can legally ask for and how they must do it.
Key Facts
- •Mr. Sangha appealed against an HMRC information notice issued under Schedule 36 of the Finance Act 2008.
- •The notice requested various documents and information relating to Mr. Sangha's involvement in several companies.
- •Mr. Sangha disputed all items in the notice.
- •The Tribunal considered issues of procedural regularity, burden of proof, and the meaning of 'reasonably required' under the legislation.
- •HMRC's enquiry into Mr. Sangha's tax returns for 2015-16 and 2016-17 were open and had not been closed.
Legal Principles
HMRC can issue an information notice if the information or document is reasonably required to check the taxpayer's tax position.
Finance Act 2008, Schedule 36, paragraph 1
An information notice only requires production of documents in the person's possession or power.
Finance Act 2008, Schedule 36, paragraph 18
An information notice cannot require production of documents originating more than 6 years before the notice date, unless approved by an authorised officer.
Finance Act 2008, Schedule 36, paragraph 20
There is no appeal against information notice requirements for statutory records.
Finance Act 2008, Schedule 36, paragraphs 29 and 62
The burden of proof rests on HMRC to show information/documents are reasonably required.
Various Tribunal decisions (Cliftonville, Hargreaves, Perring, Hackmey, Jenner)
HMRC can undertake 'fishing expeditions' when checking returns; suspicion isn't required.
Spring Capital v HMRC [2015] UKFTT 8 (TC)
Outcomes
Items (1), (2), (3), (9), and (12) of the information notice were set aside.
HMRC failed to establish that these items were statutory records or reasonably required, or that they were in Mr. Sangha's possession or power.
The remaining items were varied to specify the required period (6 April 2015 to 5 April 2017) and clarify the information sought.
To ensure clarity and focus on information relevant to the tax years under enquiry.
Mr. Sangha was ordered to comply with the varied notice within 30 days of the decision, except for Item 4, which had a different compliance deadline.
To allow HMRC to complete their enquiry.