In Marilyn May Phillipou v HMRC [2017] TC 05586 the First Tier Tribunal (FTT) upheld, but amended Schedule 36 information notices issued by HMRC.

Under Schedule 36 Finance Act 2008 HMRC can make a written request ("an information notice") for a taxpayer to provide information or produce a document provided that it is "reasonably required" for the purpose of checking their tax position.

  • The taxpayer ran a fish and chip shop in Cardiff.,
  • During the course of their enquiry into the taxpayer’s 2013/14 tax return HMRC issued 2 information notices containing 58 questions, ranging from portion sizes to wastage and goods taken for own use.
  • HMRC claimed they needed this information to better understand the taxpayer’s business.
  • The taxpayer appealed, claiming HMRC already had sufficient information to check her position and that the information requested was unreasonable and it would be unduly onerous to provide it.

The FTT rejected the taxpayer’s arguments, finding that the information notices were valid:

  • HMRC are entitled to request information about a taxpayer’s business so that they are in a position broadly equivalent to that of their advisers.
  • HMRC were entitled to try to build an alternative ‘bottom up’ model of the taxpayer’s business to test the information provided by the taxpayer.
  • If there were flaws with HMRC’s approach to this then the time to argue that was when appealing any amendments made by HMRC, and not now.
  • The information was reasonably required as it explained the specific way the business is run.
  • The requests were not unduly onerous, as the FTT suspected that much of the information would have already been supplied to the taxpayer’s advisers.

The FTT did express some sympathy for the taxpayer, in particular as there is no statutory requirement to keep records of portion sizes, wastage etc.   They therefore found that the information notices should be amended to say that, where information was not recorded at the time, she could make an estimate based on the current trading position and tell HMRC of any significant changes since 2013/14.


Our subscriber guide: Sch36 Information Notices

Case reference: Marilyn May Phillipou v HMRC [2017] TC 05586