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Compliance Checks - Involvement of First Tier Tribunal

 

 

 

 

INFORMATION NOTICES

Statutory Reference (all references are to paragraphs in Schedule 36 FA08 (as amended))

TAXPAYER NOTICE

 

Before issue

 

1. There is no requirement for HMRC to obtain prior FTT approval to give a taxpayer notice.

1

2. HMRC, however, can seek prior approval from the FTT to give a taxpayer notice (the advantage is that there is then no right to appeal by a taxpayer if the FTT has approved the giving of the notice).

3(2)

After issue

 

3. A taxpayer can appeal to the FTT against a taxpayer notice it has been given (or a requirement in it) unless:

29(1)

(a) the FTT has given its prior approval to it; or

(b) the notice, or requirement in it, obliges the taxpayer, to provide information or produce a document that forms part of the taxpayers statutory records.

29(3)

29(2)

 

4. Where the taxpayer notice relates to information or documents that form part of any persons statutory records and which relates to the supply of goods or services, acquisitions of goods from other member states or the importation of goods from outside member states (together "Supplies etc"), the taxpayer has no right of appeal to the FTT against the notice or any requirement in it. 

34(3)

THIRD PARTY NOTICE

 

Before issue

 

5. HMRC can give a third party notice without prior FTT approval if the taxpayer has agreed to the giving of it.

3(1)(a)

6. But prior FTT approval is generally required to the giving of a third party notice if the taxpayer has not consented. 

3(1)(b)

7. However, HMRC need neither prior FTT approval nor prior taxpayer agreement to give a third party notice that refers only to information or documents that form part of any persons statutory records and which relates to Supplies etc.

34(1), (2)

 

After issue

 

8. Subject to what is said in paragraph 9 below, a third party who has received a third party notice can appeal to the FTT against it, or any requirement in it, unless:

(a) it has been given with FTT prior approval; or

(b) the notice, or requirement in it, obliges the third party to provide information or produce a document that forms part of the taxpayers statutory records.  

30(1)

 

30(3)

30(2)

9. Where the third party notice relates to information or documents that form part of any persons statutory records and which relates to Supplies etc, the third party has no right of appeal to the FTT against the notice or any requirement in it. 

34(3)

UNKNOWN THIRD PARTY

 

Before issue

 

10. FTT approval is required before HMRC can give an information notice relating to an unknown third party, unless

5(3)

(a) notice is served on a parent which relates to an unknown subsidiary; or

(b) notice is served on one partner which relates to an unknown partner in the partnership.

In these cases, HMRC are not obliged to obtain prior FTT approval, but they may do so. 

35(5)(a)

 

 

37(6)(a)

After issue

 

11. A person receiving a notice relating to an unknown third party can appeal to the FTT against the notice or a requirement in it, whether or not the notice had prior FTT approval, on the grounds that compliance would be unduly onerous. 

31

12. If the notice is served on a parent in relation to a subsidiary, or one partner in respect of another, there is no appeal right if the notice requires production of the subsidiary's, or partners, statutory records. 

35(5)(b), 37(6)(b)

INVOLVED THIRD PARTY

 

Before issue

 

13. Where a third party notice or notice relating to an unknown third party is to be given to an involved third party, there is no requirement for HMRC to obtain prior FTT approval (nor to obtain taxpayer consent).

34A(2)

14. However, HMRC can, if it wants, apply to the FTT to seek prior approval to the giving of the notice.  In the case of a third party notice, the involved third party has representation rights.

3(2), 34A(3)

After issue

 

15. The appeal rights of an involved third party (on the grounds that compliance with the notice or a requirement in it would be unduly onerous) depend on whether the notice is a third party notice, or a notice relating to an unknown third party. 

(a) If it is a third party notice the provisions of paragraphs 8 and 9 above apply. 

(b) If it is notice relating to an unknown third party, then the provisions of paragraph 11 above apply.

16. However, there is no appeal right if the notice relates to information or documents which form part of the involved third party's statutory records. 

34A

 

 

 

 

 

34A(5)

INSPECTIONS

 

17. There is no need for HMRC to obtain prior FTT approval to inspect:

(a) a taxpayer's premises; or

(b) premises used in connection with making taxable supplies, acquiring goods from other member states or which are used as a fiscal warehouse. 

But it can do so; and if it does and the inspection is obstructed, penalties can be levied (which they cannot be if there is no prior FTT approval).

 

                    10

                    11

 

 13, 39

18. The same principles apply to inspect the premises of an involved third party (note that, subject as provided in the second bullet of paragraph 16 above, there is no general right to inspect third party premises).

10A, 13, 39

19. If an inspection is required by HMRC for valuing premises (or property on them), for the purpose of checking any persons tax position, then FTT approval must be given prior to the inspection if the occupier has not  agreed to the inspection and the time of it.  This is true whether the inspection is of residential or business premises.

12A, 12B

20. A taxpayer has no general right of appeal to the FTT against an inspection; but if HMRC seek FTT approval to it, both the taxpayer and the occupier of the premises have the right to a reasonable opportunity to make representations which must be presented to the FTT.