In New Way Cleaning Ltd v HMRC [2017] UKFTT TC5769 the First-Tier Tribunal (FTT) considered what statutory documentation is reasonably required under a Schedule 36 Notice relating to PAYE.

HMRC issued Sch 36 FA 2008 Information Notice and a penalty for failure to respond. The taxpayer appealed to the tribunal. The penalty was cancelled however the FTT’s decided that statutory records for PAYE include:

  • Bank statements
    • Taxpayer is unlikely to be able to submit a tax return without some dependence on its bank statement
    • They are part of the primary records used in completing company accounts
    • They show what payments are made to employees and subcontractors (this was a PAYE inspection)
  • Purchase ledger 
    • Clearly part of the records required to enable a company to complete its tax return
  • Mileage records
    • They were needed to substantiate travelling expenses claimed by the Director and employees
  • Documentation relating to Director’s loan account 
    • They would have been a necessary reference point in compiling the accounts on which the corporation tax return was based
    • The terms of the loan would be important in completing the corporation tax computations
  • A list of all employees TUPE’d over to New Way Cleaning Ltd 
    • It enabled HMRC to check whether there had been a change in employment status for any of the cleaners

In terms of other information requested by HMRC, the FTT found that:

  • A request for all employee contracts was too widely drawn:
    • The relevant employees for the purposes of the review were employed cleaners
    • It was agreed that this should be amended to only request information relating to the employed cleaners

The FTT found that, in the event that it was shown that the bank statements, purchase ledger, and director’s loan account were not statutory records, they would have been reasonable required in any case.


Our guides:

Sch 36 information notices

Sch 36 information notices (subscriber version)

Sch 36 notice: no further appeal 36 notice: no further appeal

Sch 36 third party notices 36 third party notices

Case: New Way Cleaning Ltd v HMRC [2017] UKFTT TC5769