Additional Sch 36 penalties

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This case concerned additional penalties assessed under Sch 36 for continued failure by a taxpayer to provide material reasonably required by HMRC.

The Court of Appeal decision starts with an obvious statement:

‘If a tax system is to operate fairly and efficiently, it is essential that taxpayers should provide prompt, full and accurate answers to legitimate requests for relevant information made by the tax authorities.’

The decision refers to the well-known contents of Sch 36. Para 1(1) authorises a HMRC officer to require a taxpayer to provide information or to produce a document in relation the taxpayer’s “tax position.” This is widely drawn and covers all taxes.

Paras 39-52 provide for a range of penalties. In particular, para 50 empowers the Upper Tier Tribunal to impose a penalty. The Tribunal must have regard to the amount of tax at stake.

In this case, which concerned a Barrister, Romie Tager, a penalty of £1.25m was assessed. This was reduced by the Court of Appeal.

The taxpayer had a long history of poor compliance going back to his 2006/07 Tax Return. The first Sch 36 Information Notice was issue in November 2012. The disputes meandered from HMRC to Tribunals and Courts. An Upper Tier decision released in March 2015 commented negatively on Mr Tager’s choice not to engage an accountant or tax adviser to deal with his tax affairs. Better, it said, to use his money on professionals, than pay many times more on penalties. It added, ‘I regret to say that I am not satisfied that Mr Tager is as keen to be open and candid about his affairs as he would have me believe…"

The background to the case takes ¾ of the decision. Only in para 80 are Mr Tager’s grounds of appeal referred to.

The Court of Appeal, in perhaps the first such case, provides an analysis of Sch 36, para 50 (see paras 85-93). Unusually it criticises the Upper Tier, and concluded that it had over-assessed the taxpayer. Rather than referring the case back to the UT, the CA reduced the total penalty to £220,000, a reduction of 80%.

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About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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