In James Smith v HMRC (2015) TC04592, the First Tier Tribunal (FTT) agreed that personal bank statements could be included in a Schedule 36 information notice because they contained transactions pertaining to a property business.

Facts

  • Mr Smith let various properties. In his 2011/12 SA return he included gross rents of £116,051, and net profit of £5,577.
  • HMRC opened an enquiry into the return, including the property income. It requested documentation to support the figures disclosed. Mr Smith supplied some information, but not enough to fully support the figures returned.
  • HMRC then sent a formal information notice under Sch 36 FA 2008, demanding all bank account and credit card statements which were relevant to the business i.e. that had any transactions relating to the property letting.
  • Mr Smith appealed the notice, saying that the statements were private information. He asked for an internal review, which upheld the notice.
  • Mr Smith then appealed to the FTT.

Decision

  • The FTT held that the request from HMRC was reasonable. Mr Smith did not operate a business bank account and so the account statements requested were relevant to the business and so could be requested to support the figures.
  • HMRC were however instructed to amend the notice so as to permit Mr Smith to omit information defined as personal by section 12 of the Police and Criminal Evidence (PACE) Act.

Comment

Advisers: your client may of course redact any personal transactions when showing HMRC private bank statements, providing that the transactions relating to the business are left uncovered. A black felt-tip marker is useful.

Links

James Smith v HMRC (2015) TC04592