< Go Back HMRC can access Private Financial Records in the right circumstances Posted: Dec 3, 2018
Carol Holmes & Andrew Knight v HMRC  TC6824 the
FTT agreed that HMRC should access taxpayers' private bank statements on the basis that there
was evidence that declared business income did not seem to support private outgoings. The taxpayers, under self assessment, disclosed employment earnings, dividends and interest. They ommitted some interest; HMRC began an enquiry into their returns. HMRC issued an information notice (Schedule 36 FA 2008) requesting copies of all their private bank statements. Taxpayers appealed: arguing their private records were not
statuory records and their private bank statements were not 'reasonably required' for checking
The FTT found that:
HMRC had reason to believe that the tax returns may not show their total income. Evidence from third parties indicated levels of personal
expenditure, including mortgage payments, was not commensurate with declared income. There were unexplained capital introductions made by the taxpayers into their company.
The FTT decided that, in view of the evidence of a disparity between the
appellants’ declared income and their personal expenditure, HMRC had a
legitimate and reasonable imperative to make further enquiries. The information notices were upheld.
HMRC had show that it had a genuine reason for requesting private records, and it was able to persuade the FTT that it had one. This demonstrates that the wording 'reasonably required' is, deliberately, widely worded and will be widely interpreted by the FTT. Once HMRC can show a document is 'reasonably required' then they can pursue those documents through the use of information notices.
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