P C Clarke v Her Majesty's Revenue & Customs, SPC 00735

Spc00735

Income Tax – Enquiry under section 9A TMA 1970, requirement to produce and furnish documents under section 19A TMA 1970 – Taxpayer alleging enquiry opened and requirement made for vindictive reasons – Taxpayer arguing that section 19A did not confer authority to require documents to be created – Held: (1) the Tribunal was required to consider the actual purposes of the officer in giving notice under section 19A; (2) on the evidence the officer’s purposes were the statutory purposes and were not vindictive; (3) section 19A did empower the officer to require the creation of documents; (4) subject to a minor variation the section 19A requirement was upheld

P C CLARKE Appellant

• and –

Special Commissioner: CHARLES HELLIER

Sitting in public in Brighton on 12 September 2008 and in London on 12 November 2008

The Appellant in person

Mrs Chris Cumming for the Respondents

© CROWN COPYRIGHT 2009

1. Mr Clarke appeals against a notice given to him under section 19A TMA to provide certain documents and information.. His principal ground of appeal is, broadly, that the notice is bad because it has been given for opprobrious reasons. In essence Mr Clarke says that his tax returns are being investigated and documents and particulars are being sought from him as a means for paying him back for his success on behalf of one of his clients, Mr Ades, in an action before the General Commissioners.

2. The hearing of this appeal started in Brighton: there I heard initial argument and the oral evidence of Mr Ades. Mr Clarke made serious allegations against a number of HMRC’s officers. Those officers were not present at the hearing in Brighton. They were not called to give evidence and could not be cross examined. I did not feel it proper to reach a conclusion in relation to the allegations Mr Clarke made without hearing the relevant officers. After hearing evidence and argument in relation to the other matters in the appeal I therefore directed that the hearing be adjourned to the soonest practicable date and that evidence from those officers be heard. Before the start of the reconvened hearing I provided an interim decision on the matters which had been raised before me and which would not be affected by the evidence of those officers. I recorded the evidence I had had before me, set out the conclusions I have reached thus far, and explained the directions I made. This final decision encompasses the findings of that interim decision.

The Relevant Legislation

3. Section 9A(1) TMA provides that:

“(1)     An officer of the Board may enquire into a return under section 8 or 8A of this Act if he gives notice of his intention to do so (“notice of enquiry”)—

(a)     to the person whose return it is (“the taxpayer”),

(b)     within the time allowed.”

4. There is no mention in this provision of reasons for initiating such an enquiry. There is no express restriction on the purpose for which an enquiry may be made and no right of appeal against the instigation of an enquiry. I have no jurisdiction to review the reasons for which Mr Clarke’s return was selected for enquiry or otherwise to set aside the enquiry.

5. Section 19A apples where an officer of the Board has given notice of enquiry in accordance with section 9A to a taxpayer. Subsections (1) and (2) provide:

“(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.”

Subsections (6) to (11) provide for the making of an appeal against such a notice:

“(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.

(7)     An appeal under subsection (6) above must be brought within the period of 30 days beginning with the date on which the notice under subsection (2) or (2A) above is given.

(8)    Subject to subsection (9) below, the provisions of this Act relating to appeals shall have effect in relation to an appeal under subsection (6) above as they have effect in relation to an appeal against an assessment to tax.

(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.

(10)    Where, on an appeal under subsection (6) above, the Commissioners confirm the notice under subsection (2) or (2A) above so far as relating to any requirement, the notice shall have effect in relation to that requirement as if it had specified 30 days beginning with the determination of the appeal.

(11)   The determination of the Commissioners of an appeal under subsection (6) above shall be final and conclusive (notwithstanding any provision having effect by virtue of section 56B of this Act).”

6. Thus to the extent that the items required appear to me to have been “reasonably required by the officer” for the relevant purpose I am required to confirm the notice; otherwise I must set it aside.

The Background and the contentions in more detail

7. Mr Clarke made a return for the year to 5 April 2006. He signed it on 6 January 2007 and submitted it to HMRC. On 10 October 2007 Mr Alexander, one of the Board’s officers wrote to Mr Clarke giving him notice ( in accordance with section 9A and within the time allowed) that he intended to enquire into his return. On 14 November 2007 Mr Alexander wrote to Mr Clarke requiring him to produce certain documents and information. That letter contained 10 headings under each of which a requirement was made.

8. HMRC say that the notice of enquiry was properly given and that the letter of 14 November was notice within section 19A specifying items which fell within section 19A(2)(a) and (b).

9. Mr Clarke says that the enquiry was opened vexatiously and vindictively, and that the items required in the November letter were required for vindictive reasons, and that as a result the notice should be struck down.

10. Mr Clarke says that this approach by HMRC’s officers arose in the...