First-tier Tribunal (Tax)

[2010] UKFTT 204 (TC)

TC00506

 

            Appeal number: TC/2009/12746

 

Appeal against a Section 19A TMA 1970 notice – whether HMRC made a reasonable request for the Appellant to produce certain documents

 

 

FIRST-TIER TRIBUNAL

TAX

 

 

                                        MR. ALAN HUMPHREYS                       Appellant

 

                                                                      - and -

 

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                                   REVENUE AND CUSTOMS               Respondents

 

 

 

 

TRIBUNAL:              S.M.G.RADFORD (Judge)                                                                                                   S.WONGCHONG (Member)                      

                                                                                               

                                               

 

Sitting in public at Copthall House, Sutton SM1 1DA on 18 March 2010

 

The Appellant did not appear

 

Mrs. Checkley for the Respondents

 

 

 

 

© CROWN COPYRIGHT 2010

DECISION

 

1.       The Appellant appealed against a notice under Section 19A of the Taxes Management Act 1970 (“TMA”) issued on 17 March 2009 requiring him to produce records and provide information to assist HMRC in checking that his tax return was complete and correct and that the correct amount of tax was paid (or overpaid tax repaid) for the 2006/2007 tax year.

Background

2.       The Appellant filed his notice of appeal on 23 July 2009 and the appeal was listed to be heard on 13 January 2010. Notice of the hearing was given to the Appellant on 23 October 2009.

3.       On 4 January 2010 the Appellant requested a postponement of the hearing on the grounds of ill health. Despite no evidence of ill health being provided the postponement was granted.

4.       On 4 February 2010 notice was given to the Appellant that the hearing had been relisted for 18 March 2010.

5.       On 16 March 2010 the Tribunal received a note dated 14 March 2010 from the Appellant again pleading ill health and requesting a further postponement. Again no evidence of ill health was provided.

6.       The Appellant stated that he was “forced to accept and invitation for medical free treatment in the USA” and requested a postponement of the hearing until “my scheduled return after 8 June 2010”. Attached to the note were copies of Delta airline ticket confirmations for a flight to Atlanta on 16 March. The confirmations were dated 26 February 2010.

7.       Judge Kempster considered the application for a further postponement and refused it.

8.       He stated that whilst the Tribunal always has sympathy for the health problems of the parties in proceedings before the Tribunal, Rule 2(4) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (“the Rules”) requires the parties to co-operate with the Tribunal. In his view the Appellant had not co-operated adequately in particular having regard to:

·       Not providing any evidence of ill health

·       Booking airline tickets and not notifying the Tribunal at that time of his intended absence

·       Not notifying the Tribunal of his intended absence until a few days before the hearing although he was aware of that over two weeks before

·       Inconveniencing unreasonably the Respondents as well as the Tribunal.

9.       Having heard the Respondents’ representations in respect of an adjournment of  the hearing and having fully considered Judge Kempster’s representations the Tribunal decided that it was in the interests of justice to complete the hearing under Rule 33 of the Rules.

The Facts

10.    HMRC issued an enquiry notice under Section 9A TMA on 29 July 2008. Correspondence was exchanged and a meeting was held between the Appellant and Ms. Anoff and Mr. McKenzie of HMRC on 6 January 2009 at HMRC’s offices in Kingston. At this meeting it was established that the Appellant had undertaken self employment as an odd job man, painting and decorating, telecommunications engineer and second hand car salesman during the 2006/2007 tax year.

11.    The Appellant also had an interest in two offshore bank accounts.

12.    He had not retained the business books and records required for the completion of his tax return and entries on his return were rounded sums. He had also not retained the records of investment income for inclusion on the return.

13.    The Appellant’s personal expenditure exceeded the monies apparently available to him from the detail entered on the return. The return showed income of £3,500 (turnover £4,000 and expenses £500) yet he was living in a large property on which the monthly mortgage payment was £1,500.

14.    Mr McKenzie noted that exactly the same turnover, expense and profit had been returned in the two earlier tax years. The Appellant stated that this was because he had rounded up his income from various sources in those years as well and because he had rounded up the numbers coincidentally they amounted to the same amounts.

15.    In circumstances such as these where the business records are completely inadequate the Revenue Manual at EM3550, which was exhibited to the Tribunal, provides guidance to HMRC officers suggesting that details of individual sources from which the money has been drawn should be checked.

16.    After some discussion the Appellant agreed to supply bank statements for his personal offshore and personal bank accounts for the three tax years 2004/2005, 2005/2006 and 2006/2007 within six weeks.

17.    The Appellant was telephoned on 18 February 2009 to check on what progress had been made in obtaining the bank statements. The Appellant stated that he was having difficulty obtaining them.

18.    In their Section 19A notice issued on 17 March 2009 HMRC requested copies of all bank account statements and credit card account statements in which the Appellant had an interest for the 2006/2007 tax year.

19.    The Appellant appealed and complained and HMRC replied on 7 September 2009 explaining the need for the documents and confirming that the complaint would be dealt with by HMRC’s complaints team as soon as the appeal was settled.

20.    The Appellant appealed on the basis that the offshore accounts were taxed at source and had no tax implications; he could not afford copy bank statements; and HMRC’s penalty proceedings for non compliance with the Section 19A notice was distracting him from obtaining work.

21.    HMRC also issued mandates for completion to the Appellant which would give HMRC the appropriate finance houses on the Appellants behalf but had by the date of the hearing not received any completed mandates from the Appellant.

The Law

22.    Section 19A TMA gives HMRC the power to obtain information and documents from the taxpayer:

19A Power to call for documents for purposes of certain enquiries

 

19A(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”).

 

19A(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

23.    Section 12B TMA contains the requirement to preserve records:

            12B Records to be kept for purposes of returns

 

12B(1) Any person who may be required by a notice under section 8, 8A or 12AA of this Act (or under any of those sections as extended by section 12 of this Act) to make and deliver a return for a year of assessment or other period shall–

 

(a) keep all such records as may be requisite for the purpose of enabling him to make and

deliver a correct and complete return for the year or period; and

 

(b) preserve those records until the end of the relevant day, that is to say, the day mentioned in

subsection (2) below or, where a return is required by a notice given on or before that day,

whichever of that day and the following is the latest, namely–

 

(i) where enquiries into the return are made by an officer of the Board, the day on which,

by virtue of section 28A(1) or 28B(1) of this Act, those enquiries are completed; and

 

(ii) where no enquiries into the return are so made, the day on which such an officer no

longer has power to make such enquiries.

 

12B(2) The day referred to in subsection (1) above is–

 

(a) in the case of a person carrying on a trade, profession or business alone or in partnership or a company, the fifth anniversary of the 31st January next following the year of assessment or

(as the case may be) the sixth anniversary of the end of the period;

 

(b) in any other case, the first anniversary of the 31st January next following the year of assessment

Findings

24.    We find that HMRC acted at all times within Section 19A TMA. There was an open enquiry under Section 9A TMA. The documents requested were for the purposes of the enquiry and within the taxpayer’s possession or power.

25.    We find that the documents were reasonably required for the purposes of determining whether, and if so, the extent to which the Appellant’s return was incorrect or incomplete.

26.    As a self employed person the Appellant is required under Section 12B TMA 1970 to keep all his documents pertaining to his tax return for some six years.

27.    We find that if the Appellant did not wish to obtain the documents himself then HMRC could have approached the finance houses themselves provided that the Appellant completed the mandates sent to him but he did not do so.

Decision

28.    The appeal is hereby dismissed and the Appellant is hereby ordered to comply with the Section 19A TMA notice within 30 days from the 8 June 2010 or his return to the UK from the USA whichever is the earlier.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

 

 

TRIBUNAL JUDGE S.M.G RADFORD

 RELEASE DATE: 7 April 2010