Company Fined £150,000 for Failure to Comply With Information Notice
If you are facing a tax inquiry, a lawyer will advise you that there are a wide variety of sensible steps you can take. However, as was underlined by an Upper Tribunal (UT) ruling, repeatedly failing to comply with HM Revenue and Customs (HMRC) requests for information is decidedly not one of them.
HMRC opened inquiries into a company's tax returns in respect of a two-year period as long ago as 2017. An information notice, requiring it to produce certain financial records, was issued in 2018. The company was subsequently issued with a £300 financial penalty for failing to comply with the notice.
On the basis that the company remained non-compliant, HMRC took the rare step of asking the UT to impose an additional penalty under Paragraph 50, Schedule 36 of the Finance Act 2008. In resisting the application, the company asserted, amongst other things, that it had met all its tax liabilities, that it had done all it could to meet the requirements of the notice and that no penalty was appropriate.
Ruling on the matter, the UT acknowledged that the company had disclosed some relevant records to HMRC, albeit belatedly. It was, however, not satisfied, even now, that all the documents required by the notice had been provided. On any view, the UT found, there was a significant amount of tax at risk as a result of the company's non-compliance. An additional penalty of £150,000 was imposed.