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Tribunal reduces scope of Schedule 36 Information Notices

09 February 2022. Published by Michelle Sloane, Partner

In Metropolitan International Schools Ltd v HMRC [2021] UKFTT 438, the First-tier Tribunal (FTT) partly allowed the taxpayer's appeal against information notices issued under paragraph 1, Schedule 36, Finance Act 2008.


HMRC opened an enquiry into our client, Metropolitan International Schools Ltd's (MIS), corporation tax return and opened a broad enquiry into MIS's business and operations. Despite a request being made of HMRC, it did not inform MIS as to the reasons for opening the wider enquiry. HMRC issued two information notices under paragraph 1, Schedule 36, Finance Act 2008 (Schedule 36), requesting information and documents relating to MIS's corporation tax, VAT and PAYE (the Information Notices).

Under paragraph 29(1), Schedule 36, a taxpayer may appeal against an information notice issued under paragraph 1, however, no appeal may be made where the taxpayer is required to provide a "statutory record". It is for HMRC to demonstrate that information and documents fall under the statutory record category.

Under paragraph 1, the information or document requested must be "reasonably required by the officer for the purpose of checking the taxpayer's tax position".

MIS appealed against the Information Notices on the basis the documents and information requested were not "statutory records" and/or not "reasonably required".

FTT decision

The appeal was allowed in part. The FTT set out in its decision a significantly modified form of each notice as approved by it.

In relation to burden of proof, the FTT held that HMRC had the burden of proving that the information it was requesting was "reasonably required" to check the taxpayer's tax position.  

The FTT rejected HMRC's argument that it had discharged the burden under the "presumption of regularity". The FTT said that it is required to enquire into the circumstances to assess whether an officer issuing an information notice is justified in doing so, and that such documents must be reasonably required. The FTT concluded that as it must enquire into the circumstances that caused the officer to consider that the Information Notices were required, the "presumption of regularity" should be suspended. 

The FTT also found that the burden of proving that a document or information is a "statutory record" is on HMRC. The FTT confirmed that records cease to be statutory records once the period for which the documents or information need to be retained (under statute) expires. On this basis, some of the documents HMRC were requesting from MIS were no longer statutory records. 

Finally, for both statutory and non-statutory records, the FTT held that in order to be "reasonably required" a document or information must (i) be relevant to one of the issues raised by HMRC; and (ii) be capable of assisting in checking the tax position of the taxpayer concerned. 

Accordingly, in the view of the FTT, HMRC should not have requested statutory records for all employees of MIS when a single consultant's position was in issue. A request for all computer records and entries was also considered unreasonable, as there were no reasonable grounds for HMRC to believe the records were inaccurate. 


As this case demonstrates, it is important that the recipient of an information notice carefully considers whether all the statutory requirements for the issue of a Schedule 36 information notice have been met.  HMRC often issue wide-ranging information notices and if the relevant statutory requirements have not been satisfied, there will be grounds for challenging the notice on appeal.  

HMRC confirmed in this case that, as is its usual practice, it had not advised MIS of the issues that indicated a potential loss of tax. This practice makes it difficult for a taxpayer to assess whether information is reasonably required. Accordingly, taxpayers should press HMRC for disclosure of such information. 

The decision can be viewed here.