Tribunal concludes that HMRC's information request was too vague and ambiguous

There were two matters before the First-tier Tribunal (Tax Chamber) ("FTT") in Couldwell Concrete Flooring Limited v HMRC[1].

The first was an application by HMRC to strike out the appellant's appeal against an information notice issued on 13 January 2014, pursuant to Schedule 36, Finance Act 2008 ("FA 2008"), on the basis that all of the documents and information required by the information notice formed part of the appellant's "statutory records", and as such, there was no right of appeal against the information notice[2]. The second matter was an appeal in relation to a further information notice issued by HMRC on 10 March 2014 ("the second Notice"). In relation to the first matter, the FTT concluded that all of the documents and information requested formed part of the appellant's statutory records and there was therefore no right of appeal.  The appellant's appeal, in relation to the second Notice, is considered below.

Background 

The appellant's business is laying concrete floors for garages, industrial units and supermarkets. The information notices were issued against the background of an enquiry into possible car benefits and car fuel benefits received by the directors of the appellant.

The grounds of appeal relied on by the appellant in relation to the second Notice may be summarised as follows:

(1)  the documents requested were not statutory records; and

(2)  the information requested was so vague and ambiguous as to be meaningless and impossible to comply with.

FTT's decision

With regard to the first ground, the FTT concluded that the documents requested were statutory records and as such, there was no right of appeal in relation to that aspect of the second Notice. However, the FTT observed that the terms in which HMRC had identified the documents which were to be supplied were vague. Simply referring to "reimbursements made by individuals" did not identify with “sufficient particularity” which documents were to be supplied.  The FTT commented "it seems to us that little thought has gone in to the terms of this aspect of the Information Notice". In the view of the FTT, in the event that HMRC imposed a penalty for non-compliance, the vagueness and ambiguity of HMRC's request would become relevant should the appellant appeal against such a penalty.

With regard to the second ground relied on by the appellant, the FTT was satisfied that the information requested did not constitute statutory records and as such, it had jurisdiction, under paragraph 32(3), Schedule 36, FA 2008, to hear the appeal. The FTT agreed with the appellant that the request relating to the provision of information was vague and ambiguous.

Under paragraph 32(3), the FTT has jurisdiction to confirm, vary or set aside the information notice under appeal, or a requirement contained therein. However, the FTT was of the view that the information request was so vague that it could not reasonably vary it so as to identify the information which would be reasonably required to check the appellant's tax position. Accordingly, the appellant's appeal in relation to the information requested was allowed.

Comment 

HMRC regularly issues formal information notices during the course of its enquiries and often little thought is given to identifying with sufficient particularity the documents and information requested of the taxpayer. In such instances, where the documents and information requested does not form part of the taxpayer's statutory records, serious consideration should be given to appealing against the information notice. Even in those circumstances where there is no right of appeal against the information notice, it is worth bearing in mind that should an information notice be vague and ambiguous, you may be able to successfully appeal against the imposition of penalties by HMRC for non-compliance.

It is also worth noting that it was accepted by HMRC that when requesting documents, it cannot require those documents to be produced in another format to the one in which they exist.

[1] [2015] UKFTT 0136 (TC).

[2]See paragraph 29(2), Schedule 36, FA 2008.