When undertaking tax enquiries, HM Revenue and Customs (HMRC) are well known for embarking on ‘fishing expeditions’ for information. In a recent case, a company which was under enquiry for a relatively minor matter (possible underdeclaration of car and fuel benefits for directors) was faced with a demand from HMRC for details of ‘reimbursements to individuals’.

The company thought this request was in too vague a form to comply with and appealed against the demand, the result of which was that HMRC claimed that the records were ‘statutory records’ and the company could not therefore appeal against their disclosure.

The First-tier Tribunal (FTT) agreed with the company, however, commenting that HMRC seemed to have exercised ‘insufficient thought’ over the issue of the notice, which was too vague and ambiguous to comply with. The FTT also concluded that the records sought were not statutory records and thus the company’s appeal was successful.

Although this case dealt with a company, the tendency of HMRC to demand the production of generalised and non-specific information is commonplace in enquiries into the tax affairs of individuals also.

The retention of proper records is important to enable the efficient preparation of tax returns and also to be able to provide evidence for the entries made in them. However, as much as HMRC may give the contrary appearance, their rights are not unlimited and unreasonable requests may be able to be resisted.


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