The First-tier Tribunal has held that an appeal against discovery assessments should be stayed, pending the resolution of an associated appeal against FA 2008, Sch. 36 information notices (McMeekin v HMRC [2023] UKFTT 223 (TC)).
Mr McMeekin had appealed against the notices on the grounds that the information was not “reasonably required” because he believed that he was not domiciled in the UK (“the Notices Appeal”), and that his domicile should be decided as part of the Notices Appeal.
However, a similar argument had recently been advanced before the same judge in the case of Perlman v HMRC [2021] UKFTT 219 (TC) (“Perlman”) and she had concluded that “the FTT had no jurisdiction to decide Mr Perlman’s domicile as part of a hearing against a Sch 36 Notice, and that if that conclusion was wrong, the FTT should nevertheless decline to exercise the jurisdiction.” The case was being appealed and as such Mr McMeekin’s Notices Appeal was stayed, pending its resolution.
HMRC had issued assessments in respect of some of the periods that were subject to the Sch. 36 notices and these had been appealed (“the Assessments Appeal”). These appeals had also been stayed pending the result of Perlman. Mr McMeekin submitted that the stay be lifted in respect of the assessments and should proceed to a hearing while HMRC argued that they should remain stayed behind the Notices Appeal.
The tribunal judge stated that “the relevant case law authority is RBS Deutschland, and that I must therefore decide whether the outcome of the Notices Appeal will be of material assistance in determining the Assessments Appeal, and whether it is expedient to direct the stay.”
Considering the matter, she judged that:
- Material assistance – either outcome in the Perlman case would put the FTT in a better position to determine the Assessments Appeal and thus “There is thus no doubt that the outcome of the Notices Appeal will be of material assistance in deciding three of the four years which form part of the Assessments Appeal.”
- Expedient – “the normal position is that Sch 36 Notices operate at a preliminary investigative stage, which may be followed by the closure of enquiries, the issuance of assessments and taxpayer appeals. … If the Assessments Appeal is stayed behind the Notices Appeal, the Sch 36 process will precede the FTT’s determination of Mr McMeekin’s appeal against HMRC’s assessments, so putting him as far as possible in the normal position. In my judgment, that outcome is expedient – in other words, “suitable and appropriate” and “suitable to the circumstances of the case”.
The Tribunal Rules state that “The Tribunal must seek to give effect to the overriding objective” and that the purpose of this is “to enable the Tribunal to deal with cases fairly and justly”. Considering this the judge concluded that:
“staying the Assessments Appeal will allow for ‘proper consideration of the issues’, whereas lifting the stay would not be in the interests of justice.”
The Assessments Appeal was therefore stayed until 28 days after the determination of the Notices Appeal.
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08744.html
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In Schedule 36 Notices – HMRC Information Requests, tax barrister Keith Gordon encourages full compliance with legitimate requests from HMRC but also recommends that taxpayers should stand up to requests that do not meet the strict statutory criteria. The author reminds professional advisers of the risks of providing more information than the law requires.
