Key Facts
- •Parker Hannifin (GB) Limited (Appellant) claimed tax relief on interest paid on a £238m Eurobond.
- •HMRC issued a Schedule 36 information notice requiring email searches using specified terms.
- •The notice did not specify particular documents but required all emails identified by the search terms.
- •The search yielded over 11,000 emails; PwC reviewed and identified 1,695 as relevant.
- •HMRC initially demanded all 11,000 emails, leading to the appeal.
- •The Appellant argued the notice was invalid, unreasonably broad, and constituted a fishing expedition.
Legal Principles
An information notice under Schedule 36 must 'specify or describe' the information or documents.
Schedule 36, paragraph 6(2)
'Describe' is wider than 'specify'; it allows for classes or categories of documents, even those not known to exist.
R (ex p Ulster Bank) v HMRC [1997] STC 832
Documents must be 'reasonably required' for checking the taxpayer's tax position.
Schedule 36, paragraph 1(1)
HMRC cannot use Schedule 36 powers for a fishing expedition.
R (oao Derrin Brother Properties Ltd) v HMRC [2014] STC 2238
The Tribunal must assess whether information is reasonably required based on circumstances at the time of the hearing.
Hargreaves & others v HMRC [2021] UKFTT 80 (TC); Hackmey v HMRC [2022] UKFTT 160 (TC)
Schedule 36 does not require production of privileged information.
Schedule 36, paragraph 23
Outcomes
Appeal allowed in part.
The information notice was too broad, encompassing many irrelevant documents. While the use of search terms wasn't inherently invalid, the resulting breadth made many documents not reasonably required. The Tribunal relied on PwC's categorization of irrelevant documents, except where HMRC provided valid counterarguments.
Notice varied.
The notice was amended to limit its scope to documents relevant to the Eurobond refinancing, using PwC's review as a filter. Irrelevant categories of emails identified by PwC were excluded.