Taxpayer Wins Appeal Against Information Notice

A taxpayer has succeeded in persuading the First-tier Tribunal that an information notice issued by HM Revenue and Customs (HMRC) should be set aside.

The man had submitted a return for the 2008/2009 tax year on the basis that he was not resident, and not ordinarily resident, in the United Kingdom. He had emigrated on 22 March 2008, staying briefly in Malaga before travelling to Gibraltar, and had attempted to sell his former home in the UK. Due to the state of the property market, however, he instead rented out the property. He also owned another property in the UK, in which his daughter lived, and received a dividend from a UK company he owned during the tax year in question.

HMRC opened an enquiry into the return. The man provided some of the information requested by HMRC but refused to provide bank, building society and credit card statements. HMRC then issued an information notice under Schedule 36 of the Finance Act 2008.

The taxpayer appealed against the notice.

Under Paragraph 1(1) of Schedule 36, information or documents sought in an information notice ‘must be reasonably required...for the purpose of checking the taxpayer’s tax position’ for the notice to be valid. In addition to this test, at least one of four further conditions – one of which is the existence of an open enquiry – must apply.

Having initially decided otherwise, the Tribunal eventually concluded that the test in Paragraph 1(1) was met. However, by the time of the hearing, HMRC had conceded that the enquiry had not been validly opened, so instead sought to rely on the condition that ‘an officer of Revenue and Customs has reason to suspect that an amount that ought to have been assessed to relevant tax for the chargeable period may not have been assessed’.

The Tribunal found that HMRC had failed to prove that this condition was met. HMRC’s case seems to have been weakened by the admission that the documents requested would themselves help to determine whether or not the condition applied.

The taxpayer’s appeal against the notice was therefore upheld.