© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
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i3b. Approvals, appeals, statutory records
FTT APPROVAL
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Pre-approval of taxpayer notice by FTT (optional)
“(2) An officer of Revenue and Customs may ask for the approval of the tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)).” (FA 2008, Sch 36, para 3(2)).
Failure to obtain approval does not breach Article 8 rights because the taxpayer must either be notified or the Tribunal’s approval sought – R (oao Cooke) v. HMRC [2008] STC 1847.
Up to HMRC to decide whether to seek approved notice
“It seems to me that HMRC are entitled to consider in any particular case whether proceeding by way of an unapproved notice might prejudice their investigation, either because it might lead to undue delay or because it might disclose their emerging analysis and strategy or the sources of information available to them.” (Without Notice Application v. HMRC [2017] UKFTT 148 (TC), §12, Judge Cannan).
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Conditions for FTT approval
"(3) The tribunal may not approve the giving of a taxpayer notice or third party notice unless—
(a) an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs,
(b) the tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,
(c) the person to whom the notice is to be addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to an officer of Revenue and Customs,
(d) the tribunal has been given a summary of any representations made by that person, and
(e) in the case of a third party notice, the taxpayer has been given a summary of the reasons why an officer of Revenue and Customs requires the information and documents." (FA 2008, Sch 36, para 3(3)).
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Disapplication of certain conditions
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"(4) Paragraphs (c) to (e) of sub-paragraph (3) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice the assessment or collection of tax." (FA 2008, Sch 36, para 3(4)).
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Recipient representations is to allow representations on practical difficulties
“It seems fairly clear that the reason the third party is to be told that the information or documents are required and be given a reasonable opportunity to make representations to HMRC is to enable it to state any practical difficulties with compliance. That is consistent with paragraph 30 of schedule 36, which provides that a person given a third party notice may appeal on the ground that it would be unduly onerous to comply with the notice or any requirement in it. It is equally clear that the reason the third party does not have to be given any explanation as to why the officer requires the information and documents is because it is not for the third party to argue any case for the taxpayer as to the width or nature of the investigation. It does not need to know confidential information relating to the affairs of the taxpayer.” (R (oao Derrin) v. HMRC [2016] EWCA Civ 15, §75, Sir Terence Etherton)
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Summary reasons to taxpayer (not to enable representations)
“Consistently with the legislative objectives I have described, the giving of summary reasons to the taxpayer is not for the purpose of enabling the taxpayer to make representations directly or indirectly to the FTT…The reason for the giving of summary reasons to the taxpayer under schedule 36 is purely to guard against arbitrary conduct by the tax authority and to provide the context for any application to the FTT for approval of the third party notice, approval which cannot be given unless the FTT is satisfied pursuant to paragraph 3(3)(b) that the officer giving the notice is justified in so doing.” (R (oao Derrin) v. HMRC [2016] EWCA Civ 15, §§71…72, Sir Terence Etherton)
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Conduct of approval hearing
Without notice application for approval
“(2A) An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (3)).” (FA 2008, Sch 36, para 3(2A)).
Article 8 compliant – Re an Application by HMRC to serve section 20 Notice [2006] STC (SCD) 71.
Article 6 compliant - HMRC ex p. Certain Taxpayers [2012] UKFTT 765 (TC), §31.
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Discretionary consideration of taxpayer’s representations by FTT
“Although there is no provision of Schedule 36 for the consideration of representations by the taxpayer as opposed to the third party to whom the notice is to be addressed, the representations raised a number of fundamental issues as to the Tribunal’s jurisdiction. I therefore considered it right that consideration should be given to them, and I granted the adjournment.” (HMRC ex p. certain taxpayers [2012] UKFTT 765 (TC), §3).
No right to inter partes hearing
“The third party is not given any right to appear before the FTT because, consistently with the judicial monitoring scheme rather than an adversarial one and with the limited right of objection by the third party, it is sufficient that the third party is given a right to make representations to the officer, and the officer is obliged to provide the FTT with a summary of those representations…The judicial monitoring model was approved by the House of Lords in both T.C. Coombs and Morgan Grenfell, and there has been no decision of the ECtHR, including Ravon, which has held that such a scheme is inherently inconsistent with the Convention.” (R (oao Derrin) v. HMRC [2016] EWCA Civ 15, §75…118, Sir Terence Etherton).
“In conclusion, while the legislation provides for taxpayers to be put on notice that HMRC is applying for approval of a Sch 36 notice (save if HMRC make an application under ¶3(4) of Sch 36 to be excused giving any notice to the taxpayer), and while the Court recognised that, if the taxpayer chooses to make representations, HMRC must (if received in time) present them to the Tribunal, the applicants have no further rights other than to challenge any Sch 36 notice by way of judicial review.” (Mr E v. HMRC [2018] UKFTT 590 (TC), §56, Judge Mosedale).
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“That was established in R v A Special Commissioner ex parte Morgan Grenfell & Co Ltd 74 TC 511, a case I discussed at some length in the published decision, Ex parte certain taxpayers [2012] UKFTT 765 (TC), and which was followed in the subsequent judicial review proceedings in R (on the application of Derrin Brother Properties Ltd and others) v Revenue and Customs Commissioners [2016] EWCA Civ 15. It was accepted in Morgan Grenfell that the self-evident risk of compromising the investigation by accidental disclosure of material to which the taxpayer was not entitled, and the disclosure of which would run counter to Parliament’s purpose, excluded the possibility of such a hearing. Arguments to the contrary based on article 6 when combined with article 8 of the European Convention on Human Rights were rejected in Derrin.” (A Taxpayer v. HMRC [2016] UKFTT 361 (TC), §5).
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No discretion to have an inter partes oral hearing
“Judge Mosedale concluded that this tribunal has no jurisdiction to direct an inter partes hearing of an application for approval of a third party notice under Schedule 36. I agree with that conclusion for the reasons given by Judge Mosedale. The reasoning applies with greater force to an application for approval of a taxpayer notice.” (Without Notice Application v. HMRC [2017] UKFTT 148 (TC), §10, Judge Berner).
“I conclude that the FTT has no discretion to order an inter partes hearing, under which the third party is notified of the date of, and has the right to make representations at, the hearing of HMRC’s Sch 36 application.” (re an Application by HMRC ex p. Ariel [2017] UKFTT 87 (TC), §83, Judge Mosedale).
Or to permit oral representations from the taxpayer
“Bearing in mind that I have said the interpretation of Sch 36 clearly indicates Parliament intended the tribunal only to have a monitoring role, I do not think there is any scope for interpreting para 3(3)((d), which requires HMRC merely to provide a summary of the third party representations, as giving the Tribunal having the discretion to permit oral representations from the third party even without the third party being informed of HMRC’s case.” (re an Application by HMRC ex p. Ariel [2017] UKFTT 87 (TC), §86, Judge Mosedale).
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To be heard in private:
“In those circumstances, in the absence of the taxpayer, it would not be in the interests of justice to permit the public to hear the details of the taxpayer’s personal and financial circumstances which may be put before the Tribunal in support of the application.” (A Taxpayer v. HMRC [2016] UKFTT 361 (TC), §4).
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FTT approval decision final
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"(4) A decision of the tribunal under paragraph 3, 4 or 5 is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007)." (FA 2008, Sch 36, para 6(4))
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APPEALS
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Appealing information notice
"(1) Where a taxpayer is given a taxpayer notice, the taxpayer may appeal against the notice or any requirement in the notice.
(2) Sub-paragraph (1) does not apply to a requirement in a taxpayer notice to provide any information, or produce any document, that forms part of the taxpayer's statutory records." (FA 2008, Sch 36, para 29(1) - (2))
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No appeal if tribunal approved the notice
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(3) Sub-paragraph (1) does not apply if the tribunal approved the giving of the notice in accordance with paragraph 3." (FA 2008, Sch 36, para 29(3))
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No appeal against requirement to produce statutory records
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See below.
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No separate appeals against notice and requirements in the notice
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"[36]...First, I do not accept that para 29 of the schedule envisages two separate appeals. That would be confusing and inefficient. There can only be one appeal at any one time and that appeal must encompass any complaint about the notice given by HMRC. If that appeal is then settled by HMRC agreeing to a variation of the notice (e.g. by agreeing an extension of time for compliance) then that settlement takes effect as if it were a determination of the tribunal varying the notice in the manner agreed." (R (oao PML Accounting Limited) v. HMRC [2018] EWCA Civ 2231, Longmore LJ)
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Attempt to add additional matter later may be subject to late appeal rules
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"[37] That is not to say that the taxpayer would necessarily be precluded from seeking to amend its appeal to include another ground of appeal. If that amendment was sought to be made within the statutory 30 days allowed by para 32 of the schedule, there would normally be no difficulty in it being dealt with. If it was sought to be made after time for appealing had expired, it would be necessary to consider the requirements of section 49 of the 1970 Act in relation to late appeals." (R (oao PML Accounting Limited) v. HMRC [2018] EWCA Civ 2231, Longmore LJ)
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Procedure for appeal
Notice of appeal to HMRC within 30 days
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"(1) Notice of an appeal under this Part of this Schedule must be given—
(a) in writing,
(b) before the end of the period of 30 days beginning with the date on which the information notice is given, and
(c) to the officer of Revenue and Customs by whom the information notice was given." (FA 2008, Sch 36, para 32(1))
Notice must state grounds of appeal
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"(2) Notice of an appeal under this Part of this Schedule must state the grounds of appeal." (FA 2008, Sch 36, para 32(2))
Tribunal role
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"(3) On an appeal the that is notified to the tribunal, the tribunal may—
(a) confirm the information notice or a requirement in the information notice,
(b) vary the information notice or such a requirement, or
(c) set aside the information notice or such a requirement.
(4) Where the tribunal confirms or varies the information notice or a requirement, the person to whom the information notice was given must comply with the notice or requirement—
(a) within such period as is specified by the tribunal, or
(b) if the tribunal does not specify a period, within such period as is reasonably specified in writing by an officer of Revenue and Customs following the tribunal's decision." (FA 2008, Sch 36, para 32(3) - (4))
Tribunal decision final
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"(5) Notwithstanding the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007 a decision of the tribunal on an appeal under this Part of this Schedule is final." (FA 2008, Sch 36, para 32(5))
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“Pausing there, it appears that HMRC are right: there is no right to appeal from the F-tT’s decision, the F-tT should not have referred in their decision to appeal rights, Judge Barlow should not have given permission to appeal and I must accede to HMRC’s application and strike out this appeal.” (Carmel Jordan v. HMRC [2015] UKUT 218 (TCC), §15, Judge Bishopp).
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Application of TMA appeal provisions
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"(6) Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under this Part of this Schedule as they have effect in relation to an appeal against an assessment to income tax." (FA 2008, Sch 36, para 32(6))
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Tribunal varying notice
Limiting request to reasonable scope
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"[32] I do however accept Mr Jenner’s submission that the requirement for “details of any sums drawn down from any trusts, partnerships, other individuals or any other entity…” does not specifically refer to sums drawn down by Mr Jenner and does not necessarily limit the request to information within his power or possession. I have therefore varied the drafting of this requirement accordingly." (Jenner v. HMRC [2022] UKFTT 203 (TC), Judge Sukul)
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STATUTORY RECORDS​
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No right of appeal
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"(2) Sub-paragraph (1) does not apply to a requirement in a taxpayer notice to provide any information, or produce any document, that forms part of the taxpayer's statutory records." (FA 2008, Sch 36, para 29(2))
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Distinction between appealing the whole notice and appealing a requirement
"[71] The Appellant can therefore appeal against the taxpayer notice as a whole irrespective of whether the documents and information requested are statutory records, for example pursuant to paragraph 21(2) as above, but can only appeal against any requirement in the notice, if it does not form part of the Appellant's statutory records." (AAA Oriental Limited v. HMRC [2025] UKFTT 69 (TC), Judge Snelders)
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- No appeal against decision to strike out appeal against notice insofar as it relates to statutory records
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“Paragraph 32(5) identifies a class of excluded decisions and, for the reasons I have given and do not repeat, a decision striking out a purported para 29(1) appeal to the extent that the material to which it relates falls within para 29(2) is within that class.” (Carmel Jordan v. HMRC [2015] UKUT 218 (TCC), §23, Judge Bishopp)
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- Query whether T can challenge reasonableness
Consider reasonableness of request first
"[21] It seems to us that the legislation is clear, HMRC may only obtain documents requested in a taxpayer notice if the notice satisfies the requirements of Para 1 and they are reasonably required. To be reasonably required the Statutory Records requested must be relevant to the issues that have prompted the enquiry and be capable of enabling the officer to check the tax position. Para 64 indicates that the tax position to be checked can be any period, past present or future, unless indicated otherwise. We consider that a request may be unreasonable where for example all the Statutory Records relating to all employees of the company are being requested to verify the position of a single employee, or where all the Statutory Records are being demanded but the issue under consideration is only one aspect of the Corporation tax return or VAT return." (Metropolitan International Schools Limited v. HMRC [2021] UKFTT 438 (TC), Judge Gething)
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“We have taken the approach that the need for the information requested to be reasonable in the whole context in which the notice is issued should be considered in priority to the restriction on appealing against a specific requirement of the notice to provide statutory information. Our view is that any other interpretation would be in danger of nullifying any rights of appeal against the notice as a whole in circumstances where statutory records were requested, however reasonable or unreasonable that request might be…In our view requesting information for periods outside the normal four year assessment period and for which a VAT check had already been made without providing a specific reason why information was required for those periods, is a sufficiently fundamental flaw to render the whole information notice invalid.” (The Barty Party Company Ltd v. HMRC [2017] UKFTT 697 (TC), §§68…69, Judge Short).
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No challenge to reasonableness permitted
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"[75] The language of paragraph 1(1) does make it a pre-condition of HMRC requiring the documents or information in the notice, that they are reasonably required and paragraph 29(2) does not explicitly state that this pre-condition does not apply where the records requested are statutory records. However to interpret paragraph 1(1) as meaning that even statutory records must be reasonably required in order to be included in a taxpayer notice, notwithstanding paragraph 29(2), would effectively make paragraph 29(2) redundant, which cannot have been Parliament's intention.
[76] While we accept therefore that the effect of paragraph 29(2) is not as clear as it could be, we prefer the logic set out in paragraph 13 of the Holmes & Knight decision and find that paragraph 29(2) prevents the Appellant from appealing against the production of any statutory records in the October 2023 taxpayer notice.
[77] It is therefore necessary to establish whether the requested records are statutory records, before we can go on to consider the Appellant's third ground of appeal, that the documents are not reasonably required for the purpose of checking the Appellant's tax position." (AAA Oriental Limited v. HMRC [2025] UKFTT 69 (TC), Judge Snelders)
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Burden of proof on HMRC to show information requested is statutory record
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"[21] HMRC also bear the burden of showing that any information or documents requested by the Notice are statutory records in relation to which there is no ability to bring an appeal." (Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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Meaning of statutory records
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"(1) For the purposes of this Schedule, information or a document forms part of a person's statutory records if it is information or a document which the person is required to keep and preserve under or by virtue of—
(a) the Taxes Acts, or
(b) any other enactment relating to a tax,
subject to the following provisions of this paragraph." (FA 2008, Sch 36, para 62(1))
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- Query whether what is a statutory record is context specific
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"[68] I note that this Tribunal has previously considered the question of whether the definition of statutory records should be limited by reference to the subject matter of HMRC's investigations. In New Way Cleaning Ltd [2017] UKFTT 293 (TC) (Judge Brannan), the Tribunal agreed with the following statement in an earlier decision of the Tribunal in Jonathon Beckwith [2012] UKFTT 181 (TC) (Judge Redston and Anthony Hughes) at [57]:
"The definition of statutory records in Sch 36 means that if a taxpayer is required by any statutory provision relating to tax to keep a document, then that document is a "statutory record". There is no necessary link between the tax which is under enquiry, and the source of the obligation to keep the records for tax purposes. So, for example, if a document is required to be kept by VATA, then it is a "statutory record" for the purposes of Sch 36, even if the Notice relates to documents required for an enquiry into the individual's self-assessment return."
[69] While these decisions are not binding on me, I respectfully agree with them. In issuing an information notice, HMRC's powers are as set out in FA 2008, Sch 36, and are limited by, amongst other provisions, the restrictions in paragraph 21 of that schedule, but to the extent that the notice requires the production of statutory records, there is no right of appeal. The definition of statutory records is, as set out above, in FA 2008, Sch 36, para 62, which in this case brings in the provisions of FA 1998, Sch 18, para 21." ​(Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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"[27] It might be argued that as the appellant was a company within the charge to corporation tax the records were statutory records within the meaning of paragraphs 21 and 22 Schedule 18 FA 1998. But that was not how HMRC justified the paragraph 1 notice, and in our view the meaning of “statutory records” must be derived from the relevant enactment, not just any enactment relating to tax that happens to also apply to the person concerned." (Mumbai Kitchen (Bromley) Ltd v. HMRC [2016] UKFTT 313 (TC), Judge Richard Thomas)
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- All records required to make correct return as statutory records
"[91] The reasons given by HMRC as to why they require each of the documents listed in the October 2023 taxpayer notice is set out in paragraph 46 above. As we have found that the purpose of all these documents is to check that the Appellant has properly calculated its employees' PAYE income and that it has deducted and accounted for tax correctly in respect of that income as well as completed its P11Ds correctly, it follows that these documents are PAYE records and therefore statutory records. To the extent that the requested records are not "PAYE records" because for example it transpires that the invoices requested at (3), (5), (8) and (9) are not personal in nature and so do not impact on any of the employee's PAYE income, they will be required for the Appellant to accurately complete its corporation tax return and remain therefore statutory records." (AAA Oriental Limited v. HMRC [2025] UKFTT 69 (TC), Judge Snelders)
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"[37] In our view s12B TMA 1970 requires a taxpayer to keep all records which are necessary to establish that a return is accurate. That will include all documents and information necessary to establish the income and deductible expenditure of the taxpayer in the relevant tax period. The requirement that the return must be correct and complete implies a requirement that the documents and information to be kept must evidence that the return is correct and complete.
[38] What is needed may depend to some extent on the nature of a taxpayer's business but where there is a duty to keep the information then the information is a statutory record. Where there is a request for information, it is the information which must be provided. In the present Information Notice details of information are requested and the way in which the information is provided is left to the taxpayer. This does not affect the issue as to whether what is required forms part of Mr Lin's statutory records." (Lin v. HMRC [2025] UKFTT 374 (TC), Judge Fairpo)
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- Non-business information not statutory records until chargeable period ends
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"(2) To the extent that any information or document that is required to be kept and preserved under or by virtue of the Taxes Acts—
(a) does not relate to the carrying on of a business, and
(b) is not also required to be kept or preserved under or by virtue of any other enactment relating to a tax,
it only forms part of a person's statutory records to the extent that the chargeable period or periods to which it relates has or have ended." (FA 2008, Sch 36, para 62(2))
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- Information forms part of statutory records irrespective of whether it was recorded as required
"[52] However, Items 2 and 3 were requests for information and not a request for a record. How can something be a statutory record if it is merely information that may not previously have been written down? I consider my analysis at Spring Capital 4219 at [69-78] on this question to be correct. In a nutshell, information which ought to have been recorded under paragraph 21 of Sch 18 FA 98 is a statutory record even if it wasn’t in fact recorded. So a request for information can be a request for a statutory record: this is plain from paragraph 62(1) of Sch 36 of FA 08." (Codexe Limited v. HMRC [2017] UKFTT 569 (TC), Judge Mosedale)
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“When s 62 Sch 36 is read with s 12 B TMA/para 21 Sch 18, it is plain that information which the taxpayer is required to keep and preserve, whether or not he has done so, is information which amounts to statutory records, and therefore information he can be required to deliver up to HMRC.” (Spring Capital Ltd v. HMRC [2016] UKFTT 232 (TC), §76).
- Query whether it has to be recorded in some form
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"[66] I accept Mrs Cook's submission that, for the reasons given by the Tribunal in Mathew, the definition of statutory records is not limited to documents that are already in existence at the date of issue of an information notice, but also extends to "information".
...
[126] Mr Jones submitted that a request for a “breakdown” of income is not a statutory record because it is asking for new documents to be brought into existence. I do not accept this submission because I consider that this request is for “information”, and the definition of a statutory record in FA 2008, Sch 36, para 62 applies both to information and to documents. This also accords with the Tribunal's decision in Mathew at [55], which I have quoted above." (Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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“However, in Spring Capital Ltd v HMRC [2016] UKFTT 362 at [69]-[78] Judge Mosedale disagreed with the analysis in Mathew, saying at [75] that TMA s 12B only applies to information preserved “in a medium that is reasonably permanent and accessible, and not merely in someone's head”… I did not find this part of her judgment easy to follow. She seems to be saying that information “held in a person’s head” is not a statutory record for the purposes of the relevant Act, but that it nevertheless “amounts to” statutory record under Sch 36 because it is “information which the taxpayer is required to keep and preserve” (my emphasis). If information is not a statutory record, as she suggests is the position, it is difficult to understand the basis on which he is “required to keep and preserve” that information. However, as Judge Mosedale appears to accept that a person can be required both to preserve information, and to provide that information to HMRC if issued with a Sch 36 Notice, our disagreement may be academic.” (Gold Nuts Ltd v. HMRC [2017] UKFTT 84 (TC), §§135…136).
“In Schedule 36 it is both documents and information which can be statutory records. It seems to us that a requirement to keep records in FA 1998 includes a requirement to keep both documents and information.” (Couldwell Concrete Flooring v. HMRC [2015] UKFTT 136, §18 (Judge Cannan)).
“We therefore find that information does not necessarily have to be set down in writing before it can be a ‘record’ and that therefore ‘information’ as well as ‘documents’ comes within TMA s 12B.” (Mathew v. HMRC [2015] UKFTT 139 (TC), §55 (Judge Redston))
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- Itemised information in respect of receipts
"[123] I find that Items 1 and 2 are records of “receipts…in the course of the company's activities, and the matters in respect of which the receipts…arise” within the meaning of FA 1998, Sch 18, para 21(5)(a),and so are statutory records in so far as they relate to the periods ending on 30 September 2019, 30 September 2020 and 31 July 2021.
[124] I consider that records of “receipts in the course of the company's activities” extends to an itemisation of each payment made to the company, including its date and amount. I was not directed to any authority on the meaning of “matters in respect of which receipts arise”, but in my view, the requirement to identify the persons making the payments falls within this description, as this appears to be the most straightforward way in which the company could record the “matter” to which each consultancy payment relates.
[125] I considered whether it would be sufficient for these purposes to identify each such amount as “football consultancy income”, but in my view the ordinary meaning of a record of the “matter” in respect of which a payment arises requires more detail than simply identifying the trade to which the payment relates. I therefore find that the request to identify the persons making payments to Furlong in the course of its football consultancy activities is a request for statutory records." (Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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Examples
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- Bank statements are/may be statutory records
"[47] In my view, the bank statements are statutory records. That was the conclusion of this Tribunal (Judge Anne Redston and Mrs Myerscough) in Joshy Mathew v HMRC [2015] UKFTT 139 (TC) at Para [89] and I respectfully agree." (Fresh Consulting and Support Limited v. HMRC [2022] UKFTT 353 (TC), Judge McNall)
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“The Tribunal takes judicial notice of the fact that without the intermediary of the banking system, there is no way of processing any of the card payments. The bank account through which the card sales have gone through is an indispensible operative part of the business, and therefore forms part of its business records under the definition of statutory records.” (Shimlas Ltd v. HMRC [2016] UKFTT 670 (TC), §69)
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- Personal bank account used for business purposes makes bank statements statutory records
“Quite apart from these unanswered questions, the appellant’s numerous accounts as regards the transactions between the personal and business bank accounts have rendered the so-called personal RBS–1576 account an indispensable operational part of the business. For these reasons, the statements form the RBS–1576 account form part of the “statutory records” of Ms Milligan’s business.” (Milligan v. HMRC [2017] UKFTT 703 (TC), §29, Judge Poon)
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- VAT records statutory records
“All the Companies are VAT registered, and therefore required to comply with extensive statutory record-keeping requirements at VATA Sch 11 para 6 and Reg 31 VATR. The latter states that the records which must be retained include the “business and accounting records”; copies of all VAT invoices; documentation issued or received by the company relating to “the transfer, dispatch or transportation of goods” and to “importations and exportations”, as well as “all credit notes, debit notes, or other documents which evidence an increase or decrease in consideration”.” (Gold Nuts Ltd v. HMRC [2017] UKFTT 84 (TC), §141, Judge Redston)
“We note in passing that the requirement for taxable persons to keep records extends to “his business and accounting records”. It seems to us that this applies to all business and accounting records that the trader in fact keeps. All such records would therefore be statutory records for the purposes of Information Notices.” (Couldwell Concrete Flooring Ltd v. HMRC [2015] UKFTT 135 (TC), §38)
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- Business and accounting records widely drafted
“‘Business and accounting records’ is widely drafted. It is entirely within the control of a business whether it keeps such records and it is a question of fact whether a business does in fact keep records. It would therefore be impossible to design an exhaustive or exclusive list of what documents constitute ‘business records’ but must include all electronic or hard copy correspondence, purchase and sales invoices etc. and any electronic material or paperwork received or generated by a business in the course of its operation or trading.” (Drinks Stop Cash and Carry Ltd v. HMRC [2016] UKFTT 730 (TC), §60, Judge Rupert Jones)
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- Includes due diligence and transportation documents
“We are therefore satisfied that the due diligence and transportation documents required from the appellant under the information notices, in the context of the factual background, were and are statutory records.” (Drinks Stop Cash and Carry Ltd v. HMRC [2016] UKFTT 730 (TC), §76, Judge Rupert Jones)
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- PAYE records statutory records
“Reg 97 of the Income Tax (Pay As You Earn) Regs 2003 (“the PAYE Regs”) requires employers to retain all documentation relevant to the calculation of employees’ PAYE income or the deduction of tax from those payments, and “all documents relating to any information which an employer is required to provide to HMRC” in relation to the completion of forms P11D and P9D. For the purposes of those Regulations, the term “employee” encompasses directors, see Reg 2(1) and the Income Tax (Earnings and Pensions) Act 2003, ss 4 and 5. Reg 97(1) provides that “An employer must keep and preserve for not less than three years after the end of the tax year to which they relate all PAYE records which are not required to be sent to HMRC…””(Gold Nuts Ltd v. HMRC [2017] UKFTT 84 (TC), §142, Judge Redston)
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- Contracts are statutory records
"[51] Were the 3 items requested by HMRC in the information notice the subject of this appeal (see §9) statutory records? HMRC’s case was that the purchase contract was a statutory record as it was the primary record of the price paid and date of purchase both of which needed to be known to create a correct tax return; both pieces of information at items (2) and (3) were also necessary to create a correct tax return. I agree." (Codexe Limited v. HMRC [2017] UKFTT 569 (TC), Judge Mosedale)
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“[143] In relation to the contracts a company makes with its customers and suppliers, or with its workforce, I understand HMRC’s positon to be that these are statutory records, but that it is in any event reasonable to require copies of these contracts in order to understand the taxpayer’s tax position…As already set out at §133, the relevant OED definition of a “record” is “the fact or condition of being preserved as knowledge or information, esp. by being set down in writing”. A contract preserves what has been agreed between the parties and is a “record” of that agreement.
[144] Contracts are therefore “business records” within the meaning of Reg 31(1)(a) of VATR; they are also “such records as may be needed to enable [the company] to deliver a correct and complete return for the period” under FA 1998, Sch 18, para 21(1)(a). That conclusion is consistent with the purpose of both sets of provisions, namely to ensure a business retains the key documents which underpin its transactions.” (Gold Nuts Ltd v. HMRC [2017] UKFTT 84 (TC), §§143…144, Judge Redston)
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- Contracts not statutory records
"[128] It was not clear to me that Furlong would need copies of these agreements to prepare its tax returns, nor that they would be classed as records of “matters in respect of which the receipts…arise” within the meaning of FA 1998, Sch 18, para 21(5)(a). Further, HMRC did not submit that these agreements were statutory records. I therefore find that the documents requested by Item 5 are not statutory records." (Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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- Explanation of accounting entries/transactions are statutory records
“[146] However, in the absence of such information, entries in the accounts are simply a list of numbers. It is not possible for a person to “deliver a correct and complete return” unless he knows to what the entries relate. For example, a list of payments to a director is a statutory record, but so too is information as to the purpose and nature of the payments. It is that information which allows the person to know whether the sum is a dividend, a loan, salary, the reimbursement of an expense, or something else. Similarly, a list of debts written off is a statutory record, but so is the information which explains why a decision has been made that these debts are not collectible; it is that information which allows the person to know whether he can deduct them from his profits. Explanations of accounting entries and of invoices therefore constitute information forming part of a company’s statutory records.” (Gold Nuts Ltd v. HMRC [2017] UKFTT 84 (TC), Judge Redston)
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- Schedule of properties and legal fees not statutory records
"[13] Neither party has suggested, and nor does it appear to me, that the Property Schedule and the Legal Fees Schedule are part of the statutory records of GPL. Although the underlying documents which evidence the figures in the Schedules may be part of the company's statutory records, HMRC did not seek to argue that the Schedules themselves should be so regarded." (Generator Power Limited v. HMRC [2024] UKFTT 458 (TC), Judge Sinfield)
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Not statutory records after time limit for retention expires
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(3) Information and documents cease to form part of a person's statutory records when the period for which they are required to be preserved by the enactments mentioned in sub-paragraph (1) has expired." (FA 2008, Sch 36, para 62(3))
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- Time periods for identifying statutory records not frozen at date of notice
"[59] I respectfully agree with the decision of this Tribunal in Sarah Duncan v HMRC [2018] UKFTT 296 (TC) at [28] (Judge Redston and Toby Simon), for the reasons given by the Tribunal in that case, that the time limits in the statutory records provisions continue to run and are not frozen at the date of the issue of the Notice.
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[61] HMRC did not submit that there was an open enquiry into any of the tax returns for the periods to which the Notice relates, and I had no submissions or evidence as to whether Furlong had been given notices to file tax returns for the relevant periods, or on what dates. This means I am unable to find that HMRC is still within the alternative time limits set out in FA 1998, Sch 18, paras 21(3) and 21(4).
[62] I therefore find that any records which were required to be preserved to enable Furlong to prepare tax returns for the periods ending 31 March 2017 and 31 March 2018 have ceased to be statutory records. This is relevant to some of the information and documents requested in Items 1, 2 and 5." (Furlong Services Ltd v. HMRC [2024] UKFTT 705 (TC), Judge Gauke)
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"[67] When determining the period for which records must be kept, the starting point under TMA 1970, s 12B(2) is that a person carrying on a trade, profession or business must keep their records until the fifth anniversary of the 31 January next following the year of assessment. For the tax years 2015-16 and 2016-17, these periods expired on 31 January 2022 and 31 January 2023 respectively.
[68] I respectfully agree with the decision of this Tribunal in Sarah Duncan v HMRC [2018] UKFTT 296 (TC) at [28], for the reasons given by Judge Redston in that case, that the time limits in the statutory records provisions continue to run and are not frozen at the date of the issue of the Notice. This means that the records that Mr Sangha needed to deliver correct tax returns for the years 2015-16 and 2016-17 are no longer statutory records under the time limits in TMA 1970, s 12B(2)." ​(Sangha v. HMRC [2024] UKFTT 564 (TC), Judge Gauke)
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- Time periods for retention extended where enquiry opened following notice to submit return
"[69] The time limits in TMA 1970, s 12B(2) are extended in some circumstances, and it is on these extended limits that HMRC rely. They submit that the effect of TMA 1970, s 12B(1)(b) is that records must be preserved until an enquiry into a return is completed. Therefore, according to HMRC, as there are open enquiries into Mr Sangha's tax returns for 2015-16 and 2016-17, he must preserve his records relating to those periods until the relevant enquiries are completed.
[70] However, there is an additional component to TMA 1970, s 12B(1)(b). The requirement to preserve records until the completion of any open enquiries is only triggered "where a return is required by a notice given on or before" the day referred to in TMA 1970, s 12B(2). This means that the question of whether the extended period in TMA 1970, s 12B(1)(b) applies depends on whether HMRC issued a notice to file the relevant tax return, and if so, when." ​(Sangha v. HMRC [2024] UKFTT 564 (TC), Judge Gauke)
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- HMRC failing to prove that they issued notice to submit return
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"[71] HMRC bear the burden of showing that they issued Mr Sangha with notices to file tax returns for the years 2015-16 and 2016-17, and the dates on which they did so. However, I had no evidence or submissions from HMRC on this point. I cannot deduce, from the fact that Mr Sangha filed tax returns for those years, that he must have received notices to file beforehand, because many taxpayers submit tax returns without having received notices to file. I am also unwilling to invoke, of my own volition, TMA 1970, s 12D, which applies where a person delivers a tax return without having first received a notice to file, because I do not know whether (as is required for that section to apply) HMRC have chosen to treat the return as made and delivered in pursuance of such a notice.
[72] While this point was not argued before me, I do not consider that HMRC can justly claim to have been ambushed. HMRC have expressly relied on the extended time limit in TMA 1970, s 12B(1)(b), and the legislation clearly states that the availability of the extended limit depends on whether a notice to file was served, and when. HMRC should not be surprised that they need to show that they have met this requirement.
[73] I therefore find that HMRC have not demonstrated that any of the documents required by the Notice in relation to Mr Sangha's tax returns for 2015-16 or 2016-17 are, or continue to be, statutory records." ​(Sangha v. HMRC [2024] UKFTT 564 (TC), Judge Gauke)
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Statutory records must be provided unredacted
"[56] The second point is this. The bank statements provided are very heavily redacted. They should have been provided in an unredacted form, and must now be so. Treating them as statutory records, the self-same point was dealt with by the Tribunal (Judge Jonathan Cannan and Mr John Agboola) in Andreasberg Developments LLP v HMRC [2017] UKFTT 756 (TC), which said (at Paras 17 and 18): " There is simply no basis for the appellant to argue that whilst the bank statement is a statutory record, the Appellant is entitled to redact information in the statutory record before providing a copy to HMRC. There is no authority to support such a submission and it is inconsistent with the scheme of Schedule 36 ... where a document is a statutory record, HMRC are entitled to full unredacted copies of that document ..."
[57] Although that decision is not binding on me, I respectfully agree with it, and its reasoning." (Fresh Consulting and Support Limited v. HMRC [2022] UKFTT 353 (TC), Judge McNall)
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