New way Cleaning Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 11 April 2017 |
| Neutral Citation | [2017] UKFTT 293 (TC) |
| Date | 11 April 2017 |
| Court | First Tier Tribunal (Tax Chamber) |
Judge Guy Brannan
Kevin Kinsella Snr, Kinsella Tax 2014 Limited, appeared for the appellant
Steve Goulding, Presenting Officer, appeared for the respondents
Income tax – Appeal against disclosure notice – Finance Act 2008 (FA 2008), Sch. 36, para. 1 – Whether documents requested form part of appellant's statutory records – Whether reasonably required for the purposes of checking appellant's tax position – To the extent that appeal related to statutory records the appeal was struck out – One variation to notice – Otherwise appeal dismissed.
[1] The appellant appeals against HMRC's decision to issue a notice (the notice) requiring it to produce information and/or documents under paragraph 1 Schedule 36 Finance Act 2008 (FA 2008) as part of an enquiry into the appellant's PAYE compliance.
[2] In the course of the hearing, as I shall explain in more detail, a number of matters relating to the notice were agreed or conceded and it was also agreed that one aspect of the notice should be varied. As a result, this decision effectively reflects the agreed position between the parties.
[3] I make the following findings of fact from the documents and witness evidence (Mr Arnold an HMRC officer involved in the enquiry into the appellant's PAYE affairs gave a witness statement and was cross-examined) produced to me and solely for the purposes of determining this appeal.
[4] The appellant carries on a cleaning business providing services for general and deep cleaning to customers such as clubs, pubs and restaurants across the UK.
[5] On 16 March 2016, HMRC wrote to the appellant stating that they wished to check the appellant's PAYE records in order to ensure that the appellant was complying with its PAYE obligations. The period into which HMRC were enquiring ran from 17 March 2015 to 16 March 2016.
[6] A meeting took place between HMRC and the appellant on 28 April 2016. HMRC were represented by Ms Fan and Mr Arnold and the appellant was represented by Mr Lepadatu, the director of the appellant, and by Mr Efrosi, the appellant's book-keeper.
[7] At the meeting, HMRC were informed that the appellant had four employees i.e. Mr Lepadatu, Mr Efrosi, a full-time employee who assisted in the office and one cleaner. In addition, the appellant engaged 40–50 sub-contractor cleaners.
[8] HMRC were informed that the sub-contracted cleaners supplied their own cleaning equipment and did not claim back expenses.
[9] Mr Lepadatu said that he travelled a lot and claimed travel expenses on the company credit card or sometimes by way of personal reimbursement – all receipts were kept. In addition, he used his personal car for business travel and details of all business trips were recorded.
[10] Furthermore, the appellant's representatives informed HMRC that the company owned a van and fuel for the van was also claimed for. HMRC were also informed that no other expenses were claimed and that although Forms P11D had not been submitted in the past, the appellant would commence submitting those forms this year.
[11] HMRC were informed that there was a capital account for Mr Lepadatu and that the company owed him £15,000, which he had invested in the business.
[12] On 28 April 2016, HMRC wrote to the appellant requesting 14 items of information/documents to be provided by 13 May 2016. This letter also enclosed HMRC's notes of the 28 April 2016 meeting. The letter was written by Ms Fan and the letterhead stated that the letter was sent by HMRC's Fraud Investigation Service.
[13] HMRC subsequently confirmed that, at present, it was not pursuing a criminal enquiry into the appellant's affairs but only a civil enquiry. Nonetheless, the appellant was perturbed by the letterhead and in May 2016 instructed Mr Kinsella of Kinsella Tax 2014 Limited to represent it. In my view, HMRC's letterhead was unfortunate and the concern caused to the appellant was understandable.
[14] After correspondence between HMRC and Mr Kinsella, HMRC emailed Mr Kinsella on 20 June 2016 requesting documents. In an email dated 21 June 2016, Mr Kinsella informed HMRC that he had received a lot of information which I intend to send to you within the next 7–10 days. In response, on 22 June 2016, HMRC indicated by email that they would hold off sending the Information Notice until Monday 4 July 2016 in order to allow Mr Kinsella to send the information/documents to HMRC. The email noted...
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