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2. Information powers: general

HMRC should attempt to obtain information voluntarily first

 

"[55] Finally and as the judge observed, it would be the very antithesis of good administration for an arm of the state to use compulsory, intrusive powers as a first step in obtaining information from an individual, rather than resort to them only when attempts to obtain the information voluntarily have run into the sand." (JJ Management Consulting LLP v. HMRC [2020] EWCA Civ 784, Simler LJ)

HMRC should attempt to obtain information voluntarily first

Serious fraud suspected: judicial order for delivery

 

"(1)     The appropriate judicial authority may make an order under this section if satisfied on information on oath given by an authorised officer of the Board—

(a)     that there is reasonable ground for suspecting that an offence involving serious fraud in connection with, or in relation to, tax is being, has been or is about to be committed, and

(b)     that documents which may be required as evidence for the purposes of any proceedings in respect of such an offence are or may be in the power or possession of any person.

(2)     An order under this section is an order requiring the person who appears to the authority to have in his possession or power the documents specified or described in the order to deliver them to an officer of the Board within—

(a)     ten working days after the day on which notice of the order is served on him, or

(b)     such shorter or longer period as may be specified in the order.

For this purpose a “working day” means any day other than a Saturday, Sunday or public holiday." (TMA 1970, s.20BA)

See further Sch 1AA.

Appropriate judicial authority: circuit judge or district judge

"(1)     For the purposes of section 20BA above, “the appropriate judicial authority” is—

(a)     in England and Wales, a Circuit judge or a District Judge (Magistrates' Courts);

(b)     in Scotland, a sheriff; and

(c)     in Northern Ireland, a county court judge." (TMA 1970, s.20D)

Offence

 

"(1)     Subject to subsections (2) and (3) below, a person shall be guilty of an offence if he intentionally falsifies, conceals, destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction or disposal of, a document which—

(a)     he has been required by an order under section 20BA above." (TMA 1970, s.20BB(1) - penalties include imprisonment - s.20BB(5)).

Serious fraud suspected: judicial order for delivery

VAT fraud suspected: judicial order for delivery

"(1)     Where, on an application by an authorised person, a justice of the peace or, in Scotland, a justice (within the meaning of section 308 of the Criminal Procedure (Scotland) Act 1975) is satisfied that there are reasonable grounds for believing—

(a)     that an offence in connection with VAT is being, has been or is about to be committed, and

(b)     that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person,

he may make an order under this paragraph.

(2)     An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall—

(a)     give an authorised person access to it, and

(b)     permit an authorised person to remove and take away any of it which he reasonably considers necessary,

not later than the end of the period of 7 days beginning on the date of the order or the end of such longer period as the order may specify.

(3)     The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it.

(4)     Where the recorded information consists of information stored in any electronic form, an order under this paragraph shall have effect as an order to produce the information in a form in which it is visible and legible or from which it can readily be produced in a visible and legible form and, if the authorised person wishes to remove it, in a form in which it can be removed.

(5)     This paragraph is without prejudice to paragraphs 7 and 10 above." (VATA 1994, Sch 11, para 11)

Procedure for removing documents

"(1)     An authorised person who removes anything in the exercise of a power conferred by or under paragraph 10 or 11 above shall, if so requested by a person showing himself—

(a)     to be the occupier of premises from which it was removed, or

(b)     to have had custody or control of it immediately before the removal,

provide that person with a record of what he removed.

(2)     The authorised person shall provide the record within a reasonable time from the making of the request for it.

(3)     Subject to sub-paragraph (7) below, if a request for permission to be granted access to anything which—

(a)     has been removed by an authorised person, and

(b)     is retained by the Commissioners for the purposes of investigating an offence,

is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed or by someone acting on behalf of such a person, the officer shall allow the person who made the request access to it under the supervision of an authorised person.

(4)     Subject to sub-paragraph (7) below, if a request for a photograph or copy of any such thing is made to the officer in overall charge of the investigation by a person who had custody or control of the thing immediately before it was so removed, or by someone acting on behalf of such a person, the officer shall—

(a)     allow the person who made the request access to it under the supervision of an authorised person for the purpose of photographing it or copying it, or

(b)     photograph or copy it, or cause it to be photographed or copied.

(5)     Where anything is photographed or copied under sub-paragraph (4)(b) above the photograph or copy shall be supplied to the person who made the request.

(6)     The photograph or copy shall be supplied within a reasonable time from the making of the request.

(7)     There is no duty under this paragraph to grant access to, or to supply a photograph or copy of, anything if the officer in overall charge of the investigation for the purposes of which it was removed has reasonable grounds for believing that to do so would prejudice—

(a)     that investigation;

(b)     the investigation of an offence other than the offence for the purposes of the investigation of which the thing was removed; or

(c)     any criminal proceedings which may be brought as a result of—

(i)     the investigation of which he is in charge, or

(ii)     any such investigation as is mentioned in paragraph (b) above.

(8)     Any reference in this paragraph to the officer in overall charge of the investigation is a reference to the person whose name and address are endorsed on the warrant or order concerned as being the officer so in charge." (VATA 1994, Sch 11, para 12)

Failure to comply with procedure for removal

"(1)     Where, on an application made as mentioned in sub-paragraph (2) below, the appropriate judicial authority is satisfied that a person has failed to comply with a requirement imposed by paragraph 12 above, the authority may order that person to comply with the requirement within such time and in such manner as may be specified in the order.

(2)     An application under sub-paragraph (1) above shall be made—

(a)     in the case of a failure to comply with any of the requirements imposed by paragraph 12(1) and (2) above, by the occupier of the premises from which the thing in question was removed or by the person who had custody or control of it immediately before it was so removed, and

(b)     in any other case, by the person who had such custody or control.

(3)     In this paragraph “the appropriate judicial authority” means—

(a)     in England and Wales, a magistrates' court;

(b)     in Scotland, the sheriff; and

(c)     in Northern Ireland, a court of summary jurisdiction.

(4)     In England and Wales and Northern Ireland, an application for an order under this paragraph shall be made by way of complaint; and sections 21 and 42(2) of the Interpretation Act (Northern Ireland) 1954 shall apply as if any reference in those provisions to any enactment included a reference to this paragraph." (VATA 1994, Sch 11, para 13)

VAT fraud suspected: judicial order for delivery

Information and records relating to corporation tax instalment payments

"(1)     HMRC may, at any time following the relevant date, by notice require any company to furnish them, within such time (not being less than thirty days) as may be provided by the notice—

(a)     such information relating to the computation of any amount paid in respect of the company's total liability for an accounting period in accordance with these Regulations as they may reasonably require for ascertaining whether the amount of the payment was consistent with the quality and quantity of the information available to the company, at the time the payment was due, regarding its total liability for that period;

(b)     such information as they may reasonably require for ascertaining the reasons for non-payment by the company at any time in accordance with these Regulations of any amount in respect of the company's total liability for an accounting period;

(c)     such information as they may reasonably require for ascertaining whether a claim for repayment of an amount under regulation 6(2) was properly made.

(2)     In paragraph (1) “the relevant date” means the date specified in paragraph 14(1) of Schedule 18 as the filing date for the company tax return for the accounting period concerned." (SI 1998/3175, para 10)

"(1)     HMRC may, at any time following the relevant date, by notice require a company to produce, within such time (not being less than thirty days) as may be provided by the notice—

(a)     all such books, documents and other records in its possession or power relating to the computation of any amount paid in respect of the company's total liability for an accounting period in accordance with these Regulations as they may reasonably require for ascertaining whether the amount of the payment was consistent with the quality and quantity of the information available to the company, at the time the payment was due, regarding its total liability for that period;

(b)     all such books, documents and other records in its possession or power as they may reasonably require for ascertaining the reasons for non-payment by the company at any time in accordance with these Regulations of any amount in respect of the company's total liability for an accounting period;

(c)     all such books, documents and other records in its possession or power as they may reasonably require for ascertaining whether a claim for repayment of an amount under regulation 6(2) was properly made.

(2)     In complying with a notice under paragraph (1) copies of books, documents and other records may be produced instead of originals, but—

(a)     the copies must be photographic or other facsimiles, and

(b)     an officer of Revenue and Customs may require the original to be made available for inspection in accordance with regulation 12.

(3)     In paragraph (1) “the relevant date” has the same meaning as in regulation 10." (para 11)

"(1)     An officer of Revenue and Customs authorised to do so may, at any time following the relevant date, require a company by notice to make available for inspection, at such time as that officer may reasonably require, all such books, documents and other records in its possession or power as could be required to be produced by notice under regulation 11.

(2)     Where records are maintained by computer the officer making the inspection shall be provided by the company with all the facilities necessary for obtaining information from them.

(3)     In paragraph (1) “the relevant date” has the same meaning as in regulation 10." (para 12)

Information and records relating to corporation tax instalment payments

Persons not present in the jurisdiction

 

Taxpayer notice can be issued against a person not present

"[58] In R (Jimenez) v First-tier Tribunal (Tax Chamber) the Court of Appeal held that paragraph 1 of Schedule 36 to the Finance Act 2008 empowered HMRC to issue a notice requiring a UK taxpayer resident outside the United Kingdom to provide information for the purpose of checking his tax position. Patten LJ identified two factors in particular which led him to that conclusion. The first (at para 39) was the subject matter and purpose of the legislation. The court was not concerned with the facilitation of private litigation but with the prevention of tax evasion which often has a cross-border aspect to it and which serves an important public purpose in maintaining public revenue. The second (at para 40) was that the strong policy objectives of conferring effective investigatory powers on HMRC were bolstered by the language of Schedule 36 itself. However, it is clear that in coming to his conclusion he was strongly influenced by two further factors, neither of which applies in the present case. The first of these is that the powers conferred were expressly limited for the purpose of checking the taxpayer’s tax position and this therefore meant that the powers were necessarily and only exercisable in relation to someone who is or may be liable for tax in the United Kingdom and who, to that extent, had an identifiable relationship with the United Kingdom. Accordingly, a notice under paragraph 1 could only be given to someone who was or might be a UK taxpayer and it was that status rather than his place of residence which was the key to the availability and operation of the power. (See Patten LJ at paras 35, 39.) Secondly, in Jimenez non-compliance with a notice was not made a criminal offence and so the presumption that a statute should not be construed as making conduct abroad a criminal offence had no application. Patten LJ distinguished Perry on this basis. Both Patten LJ and Leggatt LJ considered that the sending of an information notice to a UK taxpayer in a foreign State requiring him to produce information that was reasonably required for the purpose of checking his tax position in the United Kingdom did not violate the principle of State sovereignty or contravene any international obligation of the United Kingdom. In Patten LJ’s view Jimenez was not concerned with a statutory regime which criminalised the conduct abroad of a foreign national or which authorised a course of action abroad for a purpose which did not justify paragraph 1 having such a territorial reach. (See Patten LJ at paras 44, 48-49, Leggatt LJ at paras 51-57.)

[59] In my view, these further features of Jimenez clearly serve to distinguish it from the present case. Unlike the statutory provision in Jimenez, section 2(3) of the 1987 Act does not identify any connection between a non-UK based recipient of a section 2(3) notice capable of founding and limiting subject-matter jurisdiction. Indeed, it was the absence of such a feature that led the Divisional Court to seek to import a judicially developed “sufficient connection” test. Furthermore, a person who without reasonable excuse fails to comply with a requirement imposed on him by section 2 of the 1987 Act commits a criminal offence by virtue of section 2(13). As a result, the present case bears a much stronger resemblance to Perry than it does to Jimenez." (R (oao KBR Inc) v. SFO [2021] UKSC 2)

Persons not present in the jurisdiction
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