Wong Yau Lam; Sau Yau Lam
| Jurisdiction | UK Non-devolved |
| Judgment Date | 08 February 2012 |
| Neutral Citation | [2012] UKFTT 118 (TC) |
| Date | 08 February 2012 |
| Court | First Tier Tribunal (Tax Chamber) |
[2012] UKFTT 118 (TC)
John Clark (Tribunal Judge) (Chairman); Christina Hill Williams
Michael Feng of Feng & Co, Accountants, for the Appellants
Karen Weare, Appeals and Reviews Unit, HM Revenue and Customs, for the Respondents
Income Tax - self assessment - partnership return subject to enquiry - deemed and actual s. 9A enquiry into partners' returns - information notice under FA 2008 Finance Act 2008 schedule 36 subsec-or-para 1Sch. 36, para. 1 - held, information reasonably required for checking tax position - appeal dismissed - whether Tribunal's decision appealable to Upper Tribunal - no
1.The summary decision in the present case was released to the parties on 5 November 2011. On behalf of the Appellants, Mr and Mrs Lam, Mr Feng wrote a letter dated 7 November 2011 requesting the issue of a full decision, as the Appellants wish to appeal against the Tribunal's decision. Although the letter was received by the Tribunals Service on 11 November 2011, notification of the request was not communicated to the Tribunal Judge until 29 November 2011, and has therefore had to await the Tribunal's availability to produce this full decision.
2.Mr and Mrs Lam appeal against the issue of notices under Finance Act 2008 schedule 36 subsec-or-para 1paragraph 1 of Schedule 36 to the Finance Act 2008 requesting the pass book or statements for an account in their joint names at the Hong Kong branch of the Bank of East Asia Ltd for the period from 1 October 2000 to 30 September 2006. (References in this decision to "Schedule 36" are to that Schedule.)
3.The first paragraph of our summary decision was as follows:
1.The Tribunal decided that the Appellants' appeal against the notices issued to each of them on 20 June 2011 under Finance Act 2008 schedule 36 subsec-or-para 1paragraph 1 of Schedule 36 to the Finance Act 2008 should be dismissed, and that the Appellants should comply with those notices by no later than the expiry of two months from the date of release of this decision.
4.The evidence consisted of a bundle of documents prepared for the Appellants, a joint bundle prepared by the Respondents ("HMRC"), and oral evidence given by Mr Lam and by Mr John R Corbett, the Inspector of Taxes dealing with the matter on behalf of HMRC. Mr Corbett had been compelled to attend by witness summons. From the evidence we find the following background facts. We consider separately below matters which were disputed, or where there were conflicts between different parties' evidence.
5.Mr and Mrs Lam trade in partnership as Sunlight Takeaway Meals. The partnership commenced at some time before 1996. The previous accountants representing them were Wilkins Kennedy; Mr Feng's firm was appointed in later November 2010.
6.The partnership returns for Sunlight Takeaway Meals and the returns for the partners Mr and Mrs Lam were issued on 6 April 2007; the completed returns were received by HMRC on 26 September 2007.
7.On 3 December 2008 Mr Corbett issued to Mr and Mrs Lam a notice under Taxes Management Act 1970 section 12ACs 12AC of the Taxes Management Act 1970 ("TMA 1970") of his intention to enquire into their 2006-07 partnership tax return. We were not provided with a copy of the actual notices issued, but merely with a copy of the letter dated 3 December 2008 from Mr Corbett to Wilkins Kennedy. Deemed enquiries under Taxes Management Act 1970 section 12AC subsec-or-para 6(a)s 12AC(6)(a) TMA 1970 in respect of both Mr and Mrs Lam's returns were also opened on 3 December 2008.
8.On 15 December 2008 Mr Corbett and Mrs Caines, another HMRC officer, attended a meeting at the offices of Wilkins Kennedy with that firm's accountant, its tax manager and Mr Lam to obtain information about the running of Mr and Mrs Lam's business. Mr Corbett and Mrs Caines stayed after the meeting to review the information provided.
9.On 23 December 2008 Mr Corbett wrote to Wilkins Kennedy, stating that as a result of his review and following discussions with Wilkins Kennedy, he had formed the view that the records of the business were not sufficiently robust. He therefore sent copies of his notices of enquiries under Taxes Management Act 1970 section 9As 9 A TMA 1970 into the returns of both Mr and Mrs Lam.
10.Subsequently, in the absence of the information which he had requested, information notices under Taxes Management Act 1970 section 19As 19A TMA 1970 were issued to both Mr and Mrs Lam on 25 February 2009.
11.On 10 March 2009, Wilkins Kennedy disclosed to HMRC details of various bank accounts held by Mr and Mrs Lam.
12.On 17 June 2009 Mr Corbett wrote to Wilkins Kennedy setting out a list of further documents required, and commenting on the current position concerning the results to date of his review.
13.On 25 August 2009, information notices under Finance Act 2008 schedule 26 subsec-or-para 1paragraph 1 of Schedule 26 to the Finance Act 2008 ("Schedule 36 notices") were issued to both Mr and Mrs Lam.
14.On 6 November 2009 Schedule 36 notices requesting personal statements of assets and liabilities at 30 September 2006 or a more recent date were issued to both Mr and Mrs Lam.
15.On 26 November 2009 penalty notices for failing to comply with the information notices were issued.
16.A meeting was held at the offices of Wilkins Kennedy on 21 December 2009, attended by the accountant, Mr and Mrs Lam, Mrs Caines, Mr Corbett and an interpreter. The business and questions relating to its record-keeping and financial were discussed in detail, as well as matters relating to Mr and Mrs Lam's private accounts. In the course of the meeting, Mr Lam disclosed that there was an account in his and Mrs Lam's joint names with the East Asia Bank in London, into which certain money brought back from Hong Kong was banked. Mr Corbett requested details of this further account.
17.In his letter to Wilkins Kennedy dated 23 December 2009, Mr Corbett requested statements relating to the East Asia Bank London account for the period 1 October 2005 to 5 April 2007.
18.On 24 December 2009 Mr and Mrs Lam appealed against the penalty notices, following which those notices were cancelled.
19.Schedule 36 notices relating to the East Asia Bank statements were issued on 30 April 2010.
20.In their letter dated 15 March 2010, Wilkins Kennedy provided a statement of personal assets and liabilities in respect of Mr and Mrs Lam, together with their signed declaration in respect of all bank accounts held. Photocopies of the relevant pages of the East Asia Bank pass book were also enclosed. Wilkins Kennedy gave information provided to them by Mr Lam concerning the sums credited to that account.
21.On 23 March 2010 Mr Corbett replied, expressing his view that takings had been deliberately diverted from the business, some of which takings had been paid into the Bank of East Asia account. He was also of the view that this diversion would have occurred in earlier and later years. He was therefore extending his enquiries into earlier years and the 2008 year using the "discovery" provisions, and if appropriate would at a later date open 2009 using the provisions of Taxes Management Act...
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