United Kingdom Special Commissioners of Income Tax Decisions

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Cite as: [2006] UKSPC SPC00518, [2006] UKSPC SPC518

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Tieran Commane v Her Majesty's Revenue and Customs [2006] UKSPC SPC00518 (23 January 2006)

SPC00518

RETURN – Self assessment – Notice to produce – s19 TMA – Not produced as said not legitimate request – Not shown illegitimate – appeal dismissed

BEFORE THE SPECIAL COMMISSIONERS

TIERNAN COMMANE Appellant

- and -

HER MAJESTY'S REVENUE AND CUSTOMS Respondents

Special Commissioner: Adrian Shipwright

Sitting in public in London on 25 November 2005

The Appellant did not appear

K J Singal, H M Revenue and Customs Officer, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

Introduction

This is an appeal by Tiernan Commane ("the Appellant") against a Notice requiring the production of documents and other information for the purposes of the enquiry into the Appellant's Tax Return for 2001-02 ("the Notice"). The Notice was dated 17 October 2003. The enquiry had been notified by letter dated 23 July 2003. The Appellant appealed against the Notice by letter dated 8 November 2003 requesting that the appeal be heard by the Special Commissioners.

There was apparently no dispute that the enquiry had been opened, the Notice served or the appeal made in time. It is common ground that they had. It is also agreed that Item 5 of the Notice has been complied with.

The Appellant having been duly notified of the hearing did not appear. There was no good reason for this non-appearance so the hearing went ahead under rule 16.

The Issue

In essence, the issue in this case is whether the Notice is valid. In broad terms, the issue is were the documents and particulars specified in the Notice reasonably required for the purposes of the enquiry into the Appellant's return. If the Appellant shows that it is not so then a Special Commissioner may set aside the notice. The onus is on the Appellant.

The Legislation

The Legislation insofar as is relevant is found in section 19A Taxes Management Act 1970. This provides:

" (1) This section applies where an officer of the Board gives notice of enquiry under section 9A(1) or 12AC(1) of this Act to a person ("the taxpayer").

(2) For the purpose of the enquiry, the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which shall not be less than 30 days) as may be specified in the notice:

(a) to produce to the officer such documents as are in the taxpayer's possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which:

(i) the return is incorrect or incomplete; or

(ii) in the case of an enquiry which is limited under section 9A(5) or 12AC(5) of this Act, the amendment to which the enquiry relates is incorrect; and

(b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose.

(2A) The officer of the Board may also (whether or not he imposes a requirement under subsection (2) above), by a notice in writing, require the taxpayer, within such time (which shall not be less than 30 days) as may be specified in the notice:

(a) to produce to the officer such documents as are in the taxpayer's possession or power and as the officer may reasonably require for the purpose of making a determination for the purposes of section 9D(1)(c) or 12AE(1)(c) of this Act; and

(b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose.

…

(6) An appeal may be brought against any requirement imposed by a notice under subsection (2) above to produce any document or to furnish any accounts or particulars.

(7) An appeal under subsection (6) above must be brought within the period of 30 days beginning with the date on which the notice under [subsection (2) or (2A) above is given.

(8) Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (6) above as they have effect in relation to an appeal against an assessment to tax.

(9) On an appeal under subsection (6) above section 50(6) to (8) of this Act shall not apply but the Commissioners may:

(a) if it appears to them that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer of the Board for the purpose mentioned in [subsection (2) or (2A) above, confirm the notice under that subsection so far as relating to the requirement; or

(b) if it does not so appear to them, set aside that notice so far as so relating.

(10) Where, on an appeal under subsection (6) above, the Commissioners confirm the notice under subsection (2) or (2A) above so far as relating to any requirement, the notice shall have effect in relation to that requirement as if it had specified 30 days beginning with the determination of the appeal.

(11) The determination of the Commissioners of an appeal under subsection (6) above shall be final and conclusive (notwithstanding any provision having effect by virtue of section 56B of this Act)."

Evidence

A bundle of documents was produced. Further documents were produced by the Appellant. However, neither he nor the witnesses for whom witness statements were provided chose to attend the hearing. The documents were not objected to and were admitted.

Findings of fact

From the evidence I make the following findings of fact:

(a) The Appellant's self-assessment tax return the year ended 5 April 2002 was received by the Inland Revenue on 31 January 2003.

(b) A notice of enquiry under section 9A Taxes Management Act 1970 in respect of the year ended 5 April 2002 was issue John 23 July 2003.

(c) The notice of enquiry was sent to the Appellant to his property in Kent.

(d) This property has been acquired by the Appellant and Oisin Commane in October 2001.

(e) The Notice was issued on 17 October 2003.

(f) An appeal was entered on 8 November 2003. At the same time the Appellant made an election for the appeal to be heard by the Special Commissioners.

(g) The Notice required the Appellant to supply:

(i) Personal bank or building society statements.

(ii) Details relating to the Appellant's income such as pay slips, bank withdrawal/deposit slips and forms P60.

(iii) Details of the appellant's employment with Greenside and an explanation as to why no tax had been deducted.

(iv) Details of his employment following the cessation of employment with Michael Page and of other income.

(v) This is no longer in issue.

(h) The bank statements were required in relation to rental income that the Appellant had ticked the box to say was income that he had received but had not provided details.

(i) The pay slips etc were sought to assist in carrying out an analysis of the bank/building society statements in relation to his receipts and transfers between accounts.

(j) A sum received from Greenside had been disclosed on the self-assessment tax return but no detail had been given as to what the sum related to nor why it had been paid. Further no tax had been deducted from the payment which prima facie needed an explanation.

(k) Mr Commane ceased employment with Michael Page in July 2001, three months into the tax year. Details were sought of what he was doing and what he received during the rest of the tax year.

(l) I find as a matter of basic fact that it is entirely reasonable for HMRC to seek this information. I further find that HMRC could have been properly criticised if they had not sought this information.

(m) Accordingly, I find that the information sought was reasonably required for the purposes of the enquiry into the Appellant's return and tax affairs.

(n) I find as a fact that there is no reason to consider that HMRC officer was acting otherwise than truthfully and correctly.

The Appellant's Submissions

Mr Commane objected to the Notice on the following grounds:

(a) The Appellant believes that the inquiry is not legitimate.

(b) The documents and information requested are not reasonably required to check the accuracy of the Appellant's return.

(c) The relevant officer is being less than truthful and HMRC have been uncooperative and evasive.

HMRC's Submissions

HMRC contended that:

(a) a legitimate inquiry was started;

(b) the information sought is reasonably required the purposes of the enquiry into the Appellant's affairs;

(c) the information is within the Appellant's power or possession;

(d) the onus is on the appellant to show otherwise which he has singularly failed to do.

Decision

On that the evidence before me an inquiry was opened in July 2003. This was notified to the Appellant in July 2003.

There is no evidence before me that this inquiry was opened otherwise than for fully justified purposes. I find that the inquiry is for entirely legitimate reasons.

I find that the suggestions to the contrary by the Appellant unjustified and are merely a matter of exaggeration. I am not concerned with the conduct of HMRC in this case as it is not and could not be the subject matter of this appeal which is solely concerned with the legality or otherwise of the Notice. I express no view as to the conduct of HMRC. I have no reason to consider that HMRC officer was acting otherwise than truthfully and correctly. I find this as a fact.

The information sources in the Notice related to the source of rental income, payments from Greenside and interest apparently received by the Appellant. These matters were not clear from the Appellant's return. I find is a matter of basic fact that it is entirely reasonable for HMRC to seek this information. I further find that HMRC could have been properly criticised if they had not sought this information. Accordingly I find that the information sought was reasonably required for the purposes of the enquiry into the Appellant's return and tax affairs.

There is no reason to suppose that the information sought is not within the Appellant's possession or power.

The appellant has failed to show on the balance of probabilities that the information sought is not reasonably required for the purposes of checking the Appellant's return. Accordingly the appeal is dismissed

HMRC chose not to seek costs in this case. Although there is only jurisdiction to award costs against a party where a party has behaved entirely unreasonably, I record for the sake or completeness that I might well have been persuaded to award costs against the Appellant notwithstanding the strict conditions in the light of the Appellant's whole approach and failure to attend. However, this issue does not arise and I express no concluded view on it.

I dismiss the Appellant's appeal as it is not been shown that:

(a) the inquiry was illegitimate;

(b) the information was not reasonably required for the enquiry; and

(c) the information is not within the Appellant's power or possession.

I would remind the Appellant but under section 19A Taxes Management Act 1970 he is required to comply with the Notice within 30days of the issue of this decision. Failure to do so would make him liable to sanctions which could be severe.

ADRIAN SHIPWRIGHT

Special Commissioner

23 January 2006

SC/3109/2004