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The Tribunal considers the meaning of 'power' over documents

13 May 2011

An interesting case has just been heard by the First-tier Tribunal ('FTT'). The FTT held that a taxpayer had documents in its 'power', for the purposes of Section 20 Taxes Management Act 1970 (now repealed), despite not holding them or having a legally enforceable right to them.

This was on the basis that HMRC had established a prima facie case that a third party would have given the documents to the taxpayer if a request had been made and the taxpayer had failed to demonstrate that such a request would be refused.  (HMRC v. Parissis & Ors [2011] UKFTT 218).

This decision is significant because the category of documents that the taxpayer may have to produce to HMRC when they exercise their information powers (see now Schedule 36 FA 2008) is wider than the test laid out in Lonhro Limited v. Shell Petroleum [1980] 1 WA 627.  In that case, the House of Lords held that 'power' meant a presently enforceable legal right to obtain the document without obtaining anyone's consent.  According to the FTT, however, documents are within a taxpayer's power if a taxpayer could obtain them by requesting them from another person, even if that person has a legal right to refuse the request. This is an important decision in this area of the law.

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