In F Anstock v HMRC [2017] TC05784 HMRC issued the taxpayer with an Information Notice that was so poorly drafted that the FTT declared it invalid and so quashed penalties relating to the notice.
- HMRC wrote to the taxpayer accusing tax fraud.
- At some time it sent him an Schedule 36 FA 2008 Information Notice.
- The taxpayer did not reply to the notice and HMRC raised a £300 penalty in respect of his failure to respond to a notice.
- The taxpayer appealed to the FTT on the basis that no notice had been received.
The FTT found that HMRC had failed to prove when it had posted the notice, on examining the notice, it decided that it was invalid.
The judge said:
'The Notice is so poorly drafted that it would be perverse to conclude that the recipient of it could know precisely what it was that he was required to provide to the respondents by way of either information or documents. The Notice proceeds on the erroneous basis that the appellant can be expected to provide documents and/or information held by third parties, in particular companies of which he either is or was a director. That information and those documents are the property of the company; nobody else. The respondents have ample powers to obtain information from third parties, and if that is desired, then the proper procedures should be adopted.'
He continued, '...the Notice offends just about every tenet for the proper drafting of a document which is intended to have legal effect'
and described it as both 'unfair and incapable of being properly understood'.
The penalties were quashed on the basis that a taxpayer cannot be in breach of a Notice unless it is a valid notice. By “valid” the FTT measn one which meets the requirements of certainty and precision.
Comment
Badly drafted information notices are quite common. HMRC get away with this as often taxpayers and advisers are happy to cooperate and divulge information about other taxpayers, e.g. a director under enquiry is asked about his company, or vice versa, to be helpful.
HMRC should make separate requests for information and follow the requirements of schedule 36. See Information Notices and third parties.
Useful guides on this topic:
Schedule 36 Information Notices
HMRC's powers, the requirements for a valid notice, third party notices and tax case summaries
Schedule 36 Penalties
Tax penalties for failure to comply with a notice.
How to appeal a tax penalty
Top tips on drafting a successful appeal to the tribunal
Case link
Fergus Anstock v HMRC [2017] TC05784
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