Wednesday, March 11, 2009

Beware of upsetting an Inspector of Taxes

Mr Clarke, an accountant, seems to have suffered an enquiry into his own tax affairs as a direct result of winning an appeal before the Commissioners on behalf of a client. Has this ever happened to any of the readers of this blog?

The summary at the start of the full text of the decision in P C Clarke v Revenue & Customs [2009] UKSPC SPC00735 is quite illuminating and easy to follow.

In brief, Mr Clarke argued that a notice under s19 TMA to produce certain documents and information was inappropriate. He contended that the request for documentation was as a result of his success on behalf of one of his clients in an action before the Commissioners and that the enquiry was opened “vexatiously and vindictively”.

The Commisoner noted that he had no authority over the decision to open the enquiry under s9A TMA 1970. He was solely able to consider the legitimacy of the s19 request which followed on from the opening of an enquiry into Mr Clarke's 2005/06 tax return. As the s19 request was in order the appeal failed.

HMRC's evidence seems to suggest that there was an unfortunate coincidence and that the selection of Mr Clarke's return for a full enquiry in October 2007 was wholly unrelated to his success before the Commissioners in June 2007. (His return had been filed in January 2007).

Reading the Commissioner's decision I can appreciate how he reached his decision. But equally I can fully understand why Mr Clarke felt aggrieved. What about you?

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