In Mr and Mrs PQ v HMRC [2019] TC7199 the FTT decided that HMRC was able to issue a third party information notice to non-UK residents.

  • HMRC made an ex-parte application to issue Schedule 36 Third party Information Notices to non-resident persons who were both British nationals with British passports.
  • The recipients were the shareholders and directors of a UK taxpayer company.
  • They were the persons who made the decisions which gave rise to an alleged tax liability and HMRC sought information in respect of those decisions.

Reviewing the decisions in Jimenex and R (on the application of KBR Inc) v Director of the Serious Fraud Office [2018] EWHC 2368 (Admin) which was cited with approval by the Court of Appeal in Jimenez and Ex parte Blain (1879) 12 Ch.D. 522, the FTT concluded that:

  • International law would normally not permit the imposition of criminal liability on persons not within the jurisdiction of the national courts. However, serving an information notice does not impose criminal liability.
  • Non-compliance with an information notice at most may give rise to civil sanctions. it would not be a breach of international law to enforce it against assets held in the UK by the defaulter.
  • Public interest in the collection of taxes (bearing in mind that liability to UK tax arose from having either a UK residence or UK source of income) was such that it did not offend international law for HMRC to serve an information notice on a non resident taxpayer for the purpose of checking his liability to tax in the UK.

In the case of a third party information notice the question is whether there was sufficient connection between the intended recipient and the information sought to be obtained before a non-resident may be served with a paragraph 2 information notice.

  • It is not possible to tell whether the Court of Appeal in Jimenex considered British nationality by itself could be sufficient connection.  
  • From Blain, HMRC ought to be entitled to issue the notice in this case simply because the intended recipients are both British nationals, albeit no longer resident in the UK.

Were there are other facts which mean that there would be sufficient connection in this case even if the intended recipients were not British nationals?  

  • Yes, as directors and shareholders of the UK company at time alleged UK tax liability arose they were the ones who took decisions which led to that alleged liability arising. This would be sufficient connection even if they were not British nationals

There is no right of appeal against this decision, although an application for judicial review would be possible.

Our useful guides

Sch 36 Third Party Information notices
When can HMRC require a third party to provide information or produce a document in relation to a taxpayer? Who can appeal a notice? What rights does the taxpayer have?

Sch 36 information notices 
What is a Schedule 36 Information Notice? When can HMRC issue one? What rights does the taxpayer have when an information notice is issued?

How to appeal an HMRC decision
What type of a decisions are appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Mr and Mrs PQ v HMRC [2019] TC7199