FTT dismisses latest Gold Nuts enquiry appeal
In the latest tribunal case involving a company called Gold Nuts Ltd and its appeals against HMRC’s enquiries in relation to a corporation tax investigation, the First Tier Tribunal (FTT) has refused a request for a postponement, decided not to direct closure of any enquiries and dismissed appeals against information notices
19 May 2017
HMRC opened enquiries into the corporation tax returns of Gold Nuts Ltd and five of its subsidiaries (together ‘the appellants’) for the 2013 accounting period. At the same time HMRC issued information notices to each appellant in respect of the same accounting period under Finance Act 2008, Schedule 36, paragraph 1, requiring a total of 48 items.
The appellants applied to the FTT for a direction to close the enquiries; appealed against the information notices; and applied to postpone the hearing of the appeals and applications. [Gold Nuts Ltd; R Square Properties Ltd; Corona Properties Ltd; Bronze Nuts Ltd; Venture Pharmacies Ltd; Blackbay Ventures Ltd, and the Commissioners for Her Majesty’s Revenue and Customs,  UKFTT 354 (TC) TC05828].
As well as applying to postpone the hearing, no representative of the appellants attended, but the FTT found that the appellants had clearly been notified of the hearing and decided that it was in the interests of justice to proceed. In particular the FTT noted that if the hearing had not proceeded the appellants would have succeeded in postponing the hearing when their earlier attempts to do so had been refused, most recently in Gold Nuts Ltd & Ors [2017 TC 05602].
The appellants argued that because the notice of enquiry and the information notice were both included in the same envelope the condition was not met because the condition was only met if the statutory enquiry was ‘already open’ at the time the information notice was issued, because the regulations require that the notice of enquiry ‘has been given’. However the FTT agreed with HMRC that the conduct was met if HMRC issued the notice of enquiry at the same time as the Sch 36 notice.
The tribunal judge said the statutory provision would have been satisfied had the HMRC officer handed the notice of enquiry to the taxpayer at 9am, and then handed him the Sch 36 Notice at 9.01am.
The judge stated: ‘There is no practical difference between that scenario, and HMRC sending the taxpayer the two notices in the same envelope. Parliament could not have intended that condition A would be would be failed if the two were notices delivered at the same time, but satisfied if there was a gap of a minute between their delivery.’
Although the tribunal had not yet determined whether other information notices issued to the appellants should be upheld, it found the issuance of further information notices was not unreasonable. Just as it could not be unreasonable if HMRC opened a statutory enquiry during that period, it also could not be unreasonable if they also issued a linked information notice and it would be ‘absurd’ to hold that a taxpayer could significantly delay, or even prevent, the issuance of future information notices simply by appealing earlier notices.
The tribunal also found it had no jurisdiction to strike down an information notice because HMRC opened its statutory enquiry on a ‘protective basis’, even if that was the position. The appellants had argued that the issuance of the information notices was unreasonable in the context of protective enquiries into the accounting periods.
The tribunal could not allow the appeal on the basis that the information/documents required by the information notices were ‘exorbitant and unreasonable’ as they required a ‘plethora of information’. If anything requested was not a statutory record the FTT would have to consider item by item whether it met the ‘reasonably required’ test.
Looking at the specific items in the information notices the FTT noted that to the extent that the items were statutory records, they were not appealable. The FTT found that 45 of the 48 requested items were either statutory records or reasonably required.
The tribunal did, however, allow the appeals against three items. These were two requests for opinions on points of law, in this case why the relevant companies did not consider that a loan was within the Corporation Tax Act 2010, s. 45. As part of the enquiry HMRC could ask why a particular tax position had been adopted, but that was part of the enquiry process, not part of the purpose of an information notice, plus a request for a schedule which had already been provided.
In respect of the application for a direction to close the enquiries, the FTT found that there were still far too many uncertainties to make it appropriate either to direct the immediate closure of the enquiries, or to set a future date for closure.
CCH tax writer, Meg Wilson, said: ‘The FTT found that it could not direct that the enquiries be closed because there were still too many uncertainties. The three items of information the FTT decided were not required to be provided were opinions on points of law and a schedule which had already been provided.’
Gold Nuts Ltd; R Square Properties Ltd; Corona Properties Ltd; Bronze Nuts Ltd; Venture Pharmacies Ltd; Blackbay Ventures Ltd, and the Commissioners for Her Majesty’s Revenue and Customs,  UKFTT 354 (TC) is here.