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United Kingdom Special Commissioners of Income Tax Decisions
You are here: BAILII >> Databases >> United Kingdom Special Commissioners of Income Tax Decisions >> Sokoya v Revenue & Customs [2007] UKSPC SPC00621 (26 July 2007)
URL: http://www.bailii.org/uk/cases/UKSPC/2007/SPC00621.html
Cite as: [2007] STI 2021, [2008] STC (SCD) 51, [2007] UKSPC SPC00621, [2007] UKSPC SPC621
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Spc00621
NOTICE under s 19A TMA 1970 – whether information reasonably required – yes – whether to order closure of enquiry – no – appeal dismissed
ADESINA OLUSEGUN SOKOYA Appellant
Sitting in public in London on 24 July 2007
The Appellant in person
Tony Mear, HMRC Appeals Unit Wales, Scotland and Northern Ireland, for the Respondents
1.. Mr Adesina Olusegun Sokoya appeals against a s 19A Notice dated 17 July 2006 relating to his 2004-05 tax return, and applies for a closure of the Revenue's enquiries into that return. The Appellant appeared in person; the Revenue were represented by Mr Tony Mear.
2.. I find the following facts:
(1) The Appellant filed a tax return for 2004-05 on 20 September 2005 showing income of £4,650 from employment with Divinus Providentia Corporation Limited and no other income.
(2) By Notice to the Appellant dated 22 May 2006 an officer stated his intention of enquiring into the Appellant's tax return for 2004-05 and made an informal request for certain information.
(3) Not having received the information the officer issued a Notice under s 19A of the Taxes Management Act 1970 on 17 July 2006 requiring the following information within 30 days:
"1. All bank and building society statements for the year to 5th April 2005, in respect of all accounts that you held or on which you were named.
2.. All statements for all credit, debit or store cards that you held for the year to 5th April 2005.
3.. All documents relating to the same of property that took place during the year and all documents relating to the mortgage (including mortgage application) which was in existence at the date of sale. Please also let me have your capital gains tax computation and say why this was not included in your tax return.
4.. A statement showing all of your income for the year and all of your outgoings (ie accommodation costs, food, entertainment etc) for the year."
(4) The Appellant appealed against the Notice on 7 August 2006 electing for it to be heard by the Special Commissioners. The letter stated that the information and documents requested were superfluous for the Revenue's declared intent. He purported to appeal against the Notice to enquire into the tax return which after some correspondence the Revenue (and the Special Commissioners) have taken to be a request to close the enquiry.
3.. The following are the relevant provisions of the Taxes management act 1970
"19A Power to call for documents for purposes of certain enquiries
(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.
…
(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.
…
(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.
28A Completion of enquiry into personal or trustee return
(1) An enquiry under section 9A(1) of this Act is completed when an officer of the Board by notice (a "closure notice") informs the taxpayer that he has completed his enquiries and states his conclusions.
In this section "the taxpayer" means the person to whom notice of enquiry was given.
(2) A closure notice must either—
(a) state that in the officer's opinion no amendment of the return is required, or
(b) make the amendments of the return required to give effect to his conclusions.
(3) A closure notice takes effect when it is issued.
(4) The taxpayer may apply to the Commissioners for a direction requiring an officer of the Board to issue a closure notice within a specified period.
(5) Any such application shall be heard and determined in the same way as an appeal.
(6) The Commissioners hearing the application shall give the direction applied for unless they are satisfied that there are reasonable grounds for not issuing a closure notice within a specified period."
4.. The Appellant contends:
(1) The Revenue have no power to enquire into items where there is no entry in the tax return.
(2) The officer did not reasonably require the information. It was an enquiry into his lifestyle, not into the tax return.
(3) The return is complete. He has ordered his affairs in a way so as not to pay any tax.
5.. Mr Mear contends:
(1) The officer had explained the reason for the questions in a letter of 5 September 2006:
"However the remainder of your return is blank, showing that you are stating that you have no taxable income other than your salary. I need to check that this is in fact the case (and this will necessarily mean that I will need to look at whether such a salary is sufficient for you and your family to live on) and the only record which I could possibly look at in order to be satisfied of this would be the kind of documents which I have asked for."
(2) No information had been given in reply to the s 19A Notice except in relation to question 3 where the Appellant said the property disposed of was his principal private residence, which the Revenue had not accepted because the disposal was not of the house in which he was currently living before the disposal.
(3) According to information that I saw the Revenue know that the Appellant is a director of 5 companies and secretary of 5 companies. He had a mortgage which was repaid on 2 March 2005 under which the monthly payments were £864. Tax credit records show that he has two children born in 1990 and 1993. Mr Mear produced a letter from Divinus Providentia Corporation Limited trading as DPCL Accountants relating to a client which was signed "S. Sokoya" as "partner" with a signature that looks like the Appellant's. The letter states that "The firm operates subject to guidance of the Institute of Chartered Accountants and the Chartered Institute of Management Accountants UK."
(4) The Appellant appears to have outgoings on the mortgage alone in excess of his income and it is reasonable for the officer to require answers to his questions. Since the officer knew no more now than when the enquiry opened it was not appropriate to close the enquiry yet.
6.. The question is whether it appears to me that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete. Clearly the enquiry need not be limited to the entries in the return because the officer can require information to determine whether the return is incomplete. I can see nothing unreasonable in any of the questions. The Appellant says that he has ordered his affairs so as not to pay any tax but has not said how. I wondered if, for example, it was because he was not domiciled, but no such claim is made in the return. Since his income cannot support his expenditure it seems entirely reasonable to me that the Revenue should to check his taxable income. The questions are reasonably required for this purpose.
7.. Since I have decided that the Revenue are entitled to the information required by the s 19A Notice it is clearly premature to close the enquiry.
8.. Accordingly I dismiss both appeals. The 30 days for answering the Notice runs from the date of release of this decision.
SC 3077/07
Authorities referred to in skeletons and not referred to in the decision:
Mother v Inspector of Taxes [1999] STC (SCD) 279
Accountant v Inspector of Taxes [2000] STC (SCD) 522