In Dr Kathleen Long v HMRC (TC 03339), it was held that a doctor was not required to disclose her diary under a Schedule 36 information notice.
Under Schedule 36 Finance Act 2008, HMRC may:
- make a written request ("an information notice") for a taxpayer to provide information or a document,
- if the information or document is reasonably required by the officer for the purpose of checking the taxpayer's tax position.
The taxpayer had made an innocent mistake in preparation of her tax return. HMRC enquired into her return and requested her business diaries. HMRC claimed that the business diaries were reasonably required to check the doctor’s tax position.
• The diaries contained some patient details, such as names, phone numbers and some clinical details about their treatment.
• The names recorded on particular days recorded appointments, but this did not necessarily indicate that the patient attended or received treatment on that date.
• The diaries contained no financial information; and what was contained in them did not allow income to be calculated.
The FTT concluded that “the diary was of no relevance or use to HMRC” and so was not reasonably required in order to check the taxpayer’s position.
There was a question as to “duty of confidentiality” in respect of the patient’s details. The FTT concluded that it was not necessary to decide the issue whilst quoting approvingly from the European Court of Human Rights case, Z v Finland 25 EHRR 371.
HMRC has some different ideas about what it should be able to request under a Schedule 36 notice. Its Enquiry manual suggests “including items which were not used in preparation of the accounts but which are relevant and can be reasonably required in checking a return for example, appointment diaries, see EM1561 - Opening the Enquiry: Information Request: Full Enquiry - Business Taxpayer
On the confidentiality aspect despite saying that "Medical information in itself is not normally relevant to a compliance check", HMRC’s compliance manual also states that “Appointments diaries or other records which merely name the patient/client are not ‘personal records’.” See http://www.hmrc.gov.uk/manuals/chmanual/ch22200.htm and also http://www.hmrc.gov.uk/manuals/chmanual/ch207326.htm.