In Tony Michael Jimenez v FTT [2019] EWCA Civ 51 the Court of Appeal overturned the High Court decision and ruled that a Schedule 36 information notice issued to a taxpayer abroad was valid.
Mr Jimenez, a UK national with a Spanish passport, had left the UK to live in Cyprus and Dubai during the period covered by the Schedule 36 notice (2004 to 2014).
A Schedule 36 FA 2008 notice is a formal request by HMRC for information and may be issued:
- To the taxpayer themselves, under paragraph 1 of the schedule.
- To third parties, without the taxpayer’s knowledge.
- Third party notices must be FTT approved unless the taxpayer agrees, or there are special circumstances; notices to taxpayers require FTT consent but not that of the taxpayer.
The High Court had found, on judicial review, that a Schedule 36 information notice has territorial limits; it cannot be issued to a non-resident taxpayer and as an enforcement provision it cannot be given to a person abroad. Mr Jimenez’s notice was quashed by the court.
On appeal by HMRC, the Court of Appeal disagreed with the High Court ruling that the notice was valid:
- There is no overt or express restriction on the geographical operation of paragraph 1, and the list of taxes which are relevant to the assessment of the taxpayer's tax position strongly suggest that it was intended to be available to investigate the position of persons resident abroad.
- A paragraph 1 notice can only be given to someone who is or may be a UK taxpayer and it is this status rather than his place of residence which is key.
- The existence of mutual assistance arrangements with other countries does not automatically mean that paragraph 1 is limited to domestic application.
- Schedule 36 is intended to have the widest territorial reach that is consistent with international law. The sending of a taxpayer's notice to Mr Jimenez in Dubai had not been shown to be inconsistent or to contravene any international law; it did not involve any official act in Dubai, instead the taxpayer received a notice in the post requiring him to provide information and documents to HMRC in the UK.
Unless Mr Jimenez decides to appeal to the Supreme Court, this decision will stand as binding precedent for other non-resident taxpayers who are under HMRC enquiry where a schedule 36 notice may be deemed necessary to assist with that enquiry.
Links to our guides:
Schedule 36 information notices
What are HMRC's powers to obtain information about taxpayers?
Schedule 36 Third Party notices
When can HMRC ask a third party for information about a taxpayer? What are the taxpayer's rights?
Residence v non-residence: tax treatment
This guide compares the tax position of a UK resident with a non-UK resident taxpayer.
Non-residents tax toolkit
This toolkit covers the key UK tax issues for non-UK resident individuals holding UK assets and property.
External links:
Tony Michael Jimenez v FTT [2019] EWCA Civ 51
High court decision Tony Michael Jimenez v FTT and HMRC [2017] EWHC 2585