RK Hosking v The Commissioners for HMRC
[2023] UKFTT 943 (TC)
Andrew James Wilson v The Commissioners for HMRC
3 November 2023
[2023] UKFTT 944 (TC)
First-tier Tribunal
HMRC fined Andrew for not giving them documents about a trust. Andrew said the trust was fake, but the judge said that doesn't matter; the question is whether he should have given the documents anyway. The judge said the previous decision about the documents was final because Andrew didn't appeal, so the case will go ahead to see if Andrew had a good reason for not giving the documents.
Key Facts
- •HMRC imposed a £300 penalty on Andrew Wilson for failing to provide information and documents requested under Schedule 36 Finance Act 2008 regarding his tax return for the year ended 5 April 2019.
- •The request related to Wilson's use of a disguised remuneration trust (AILRT).
- •Wilson 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 maintained that the trust's validity was irrelevant to the penalty, as the information request was based on a valid enquiry under the Taxes Management Act 1970.
- •Wilson appealed the penalty and applied for a stay of proceedings pending the outcome of the arbitral proceedings.
Legal Principles
Schedule 36 Finance Act 2008 allows HMRC to require taxpayers to provide information or produce documents reasonably required for checking their tax position. A person only needs to produce documents in their possession or power.
Schedule 36 Finance Act 2008
Section 49F Taxes Management Act 1970 states that if HMRC gives notice of review conclusions and no appeal is notified to the Tribunal, those conclusions are treated as a formal settlement.
Section 49F Taxes Management Act 1970
In penalties appeals under Schedule 36, the Tribunal's jurisdiction is limited to whether there was non-compliance with the notice and whether there was a reasonable excuse. The validity of the information notice itself is not reviewable.
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 involves establishing the facts, proving them, determining if they objectively provide a reasonable excuse, and considering any delay after the excuse ended.
Christine Perrin v HMRC [2018] UKUT 156 (TCC), William Archer v HMRC [2023] EWCA CIV 626
Outcomes
The application for a stay of proceedings was refused.
The validity of the trust was deemed irrelevant to the penalty appeal. The Tribunal lacked jurisdiction to consider the validity of the information notice because the appeal was limited to whether Wilson complied with the notice or had a reasonable excuse for non-compliance. The review of the information notice was final due to no appeal being lodged with the Tribunal.