Spc00650

NOTICE under s.19A TMA 1970 – Whether reasonable to have made it – Yes – Appeal dismissed 

THE SPECIAL COMMISSIONERS

	MR A	Appellant

-	and –

	THE COMMISSIONERS FOR HER MAJESTY’S REVENUE & CUSTOMS 	 Respondents

		

				Special Commissioner:  SIR STEPHEN OLIVER QC

Sitting in private in London on 6 November 2007

J Hibbert of BNB Tax Consultants for the Appellant 

Ewan Marland, HMRC Appeals Unit, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1.	Mr A appeals against a Notice under s19A of Taxes Management Act 1970 (issued on 13 November 2006) requesting documents and information for the purpose of HMRC’s enquiry into his return for 2004/05.

2.	Mr A’s grounds of appeal are that in view of his ill health, known to HMRC at the time of issue of the Notice, “the Notice … did not reasonably require the documents or particulars requested”. In the circumstances HMRC had been unreasonable in pursuing the enquiry as quickly as they had; they should have deferred the enquiry and not issued the notice in order to support Mr A’s recovery.  In any event the time allowed for compliance in the original notice had been inadequate and inconsistent with the sympathetic treatment afforded to other taxpayers such as flood victims.  

3.	There is no dispute that Mr A was diagnosed with cancer in June or July 2006 and is still undergoing treatment.  

Background facts

4.	An enquiry into Mr A’s self-assessment return for the year to 5 April 2004 had been opened by HMRC in November 2005.  An enquiry into his return for the year to 5 April 2005 had been opened by letter of 9 August 2006.  In a letter of 15 August 2006 Mr A’s agent informed HMRC of the diagnosis and that he would be undergoing surgery in the following week to be followed by chemotherapy.

5.	The Notice under section 9A sent to Mr A’s agent on 9 August 2006 had requested information and documents in the following categories:

•	Sales and purchase ledgers and cash books 
•	Supporting documentation such as purchase invoices and expense records
•	Bank and credit card statements, cheque book stubs and paying-in books
•	A statement of assets and liabilities at 30 June 2006.  (The requirement for this documentation was subsequently dropped.)

The date for providing the information had been set as 18 September 2006.  When HMRC received the agent’s letter of 15 August, HMRC wrote offering to collect any documents from Mr A’s home and extending the deadline until 2 October 2006.  Following a further letter from Mr A’s agent suggesting (among other things) that the enquiry be put off until April 2007, HMRC wrote on 27 September extending the deadline until 9 November 2006, explaining the reasons for continuing with the enquiry and suggesting that Mr A provide mandates so that HMRC could request bank and credit card statements.

6.	The day before the 9 November deadline HMRC tried to call Mr A’s agent in the hopes of helping in the production of the information rather than issuing a formal notice.  The message received by HMRC was that the agent was busy and was requesting a written message from HMRC.  In the circumstances, explained Jo Gray who gave evidence, she decided the better course was to issue a formal section 19A Notice.  This was issued on 13 November, i.e. 93 days after the initial request, with a deadline of 19 December 2006.  Mr A appealed on 14 December.

7.	Mr Hibbert for Mr A did not dispute that the documents requested in the section 19A Notice were themselves “reasonably required” for the purpose of determining whether Mr A’s 2005 self-assessment return was incorrect or incomplete.  (As mentioned, HMRC withdrew the requirement for the statement of assets and liabilities as of 31 July 2006.)  Mr A’s case, presented by Mr Hibbert, is whether the issue of the section 19A Notice on 13 November was a wholly unreasonable act in view of Mr A’s state of health and in any event that the time limit for compliance was inappropriate and not proportionate to the nature of the enquiry.

The statutory provision

8.	Section 19A provides, so far as is relevant, as follows:

(1)	This section applies where an officer of the Board gives notice of enquiry under section 9A(1) … to a person (“the taxpayer”).

(2)	For the purposes 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 purposes of determining whether and, if so, the extent to which –

(i)	the return is incorrect or incomplete ….

(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 … the Commissioners may –

(a)	if it appears to them that the production of the documents or the furnishing of the accounts or particulars was reasonably required by the officer of the Board for the purpose mentioned in subsection (2) … 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.”

The authority of this Tribunal

9.	The Commissioners (i.e. Special Commissioners and General Commissioners) have the express jurisdiction to determine whether the “production of the documents or information or the furnishing of the account or particulars” is reasonably required for the purposes of determining whether the taxpayer’s return is or is not correct and complete.  That is in subsection (9) of section 19A; and as I understand the case for Mr A (and have noted above), it is conceded that the documents and information set out in the section 19A Notice are reasonably required.  

10.	But does the Tribunal have the authority to confirm the section 19A Notice or set it aside, as the case may be, on other grounds, such as the alleged unreasonableness of the issue of the notice in the light of the taxpayer’s known ill-health or the time allowed for compliance?  I mention in this connection the report from the Consultant in the hospital where Mr A is receiving treatment.  This is dated 3 October 2007.  The Consultant states that Mr A should be extended every sympathetic consideration at this time and if possible, the enquiries regarding his taxation should perhaps be deferred until he is in a more sound frame of physical and mental health.  I do not however think that the Tribunal has the jurisdiction to set aside the notice on those grounds.  The only control given to the Commissioners is, as already observed, to set the notice aside if it relates to documents and information that are not reasonably required for the purposes of the “enquiry”.  But whether the Respondents acted reasonably in issuing the notice and setting the compliance date in relation to a request for particular documents and information that are reasonably required is a different matter.  It goes to the question of whether HMRC have, in the particular circumstances, acted in accordance with principles of good administration by issuing such a notice.  That goes outside our jurisdiction which is confined to the particular situation described in subsection (9). 

Conclusion

11.	I do not think that this is a proper case to set aside the Notice.  

12.	Having said that I would only comment that in the present circumstances HMRC have, I think, acted reasonably.  In this respect I am speaking outside my jurisdiction.  HMRC issued the section 19A Notice only after being told, on 9 November, that Mr A’s agent was busy and could not discuss the matter and wanted HMRC to put their message in writing.  HMRC know that the relevant documents are in Mr A’s possession or power.  They have undertaken not to seek an interview with Mr A until March 2008 at the earliest.  They have undertaken to collect the documents and information from Mr A’s agent and so spare him the embarrassment of a revenue visit at his house.  

12.	I directed that this matter be heard in private and that the decision would be anonymised before publication.  

SIR STEPHEN OLIVER QC
SPECIAL COMMISSIONER

RELEASED: 20 November 2007

SC 3127/2007