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WhatsApp messages used to challenge enquiry notice

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WhatsApp screenshots were successfully used as evidence by a taxpayer to prove that HMRC had been late in delivering a notice of enquiry.

30th Nov 2023
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Richard Monks saw some success at the first tier tribunal (FTT), using WhatsApp messages to prove that HMRC had delivered a notice of enquiry late. However, the taxpayer was less successful in challenging the validity of his schedule 36 information notice.

Under section 9A TMA 1970, HMRC has up to 12 months after the day an on-time return is delivered to open an enquiry.

Monks lodged his 2019/20 tax return on 29 January 2021. On 27 January 2022, HMRC issued Monks a notice of enquiry under section 9A.

In March 2022, HMRC wrote to Monks by email as none of the information requested had been provided and issued him an information notice under schedule 36, FA 2008. 

Monks argued that the notice of enquiry (and consequently, the information notice) had been received late, and that the information notice requested items that were not reasonably required.

Both the enquiry and information notice were upheld on review. Monks appealed to the first tier tribunal [TC08954].

WhatsApp messages provide crucial evidence

On the basis of HMRC’s evidence, the FTT was satisfied that HMRC had posted the notice of enquiry to Monks on 27 January 2022. The FTT found that HMRC had met the requirements of section 7 Interpretation Act 1978, and that in the ordinary course of post it would have been expected that the letter would have been delivered within one day (in other words, the letter was deemed delivered on time). As an aside, while both parties’ arguments gave reference to the impact of Covid-19 on postal times, no definitive evidence was given on this point.

However, Monks produced WhatsApp messages with pictures of the enquiry letter that were dated 1 February 2022. Monks’ evidence, which the FTT found credible, was that his post box was checked every day and that any mail relating to his financial affairs was sent immediately to his accountant. Monks’ accountant also confirmed that he had received a number of missed calls and that he had then contacted Monks.

In light of this evidence, the FTT found that the enquiry had not been delivered promptly, and accordingly it was not valid.

Condition B satisfied

For an information notice to be valid where a tax return has been lodged, it’s necessary for a taxpayer to meet at least one of the conditions in paragraph 21, schedule 36 FA 2008.

With the notice of enquiry found not to be valid, condition A could no longer be satisfied. However, HMRC argued that condition B under paragraph 21(6) was met on the basis that HMRC believed that taxable income had been omitted from Monks’ 2019/20 return.

HMRC produced links to Companies House, showing Monks as a director of various companies. HMRC argued that Monks’ income in 2019/20 was insufficient to support his lifestyle and expenditure and therefore the self assessment was insufficient, noting that Monks had only declared one directorship and associated income there from in his tax return.

The FTT found that condition B had been satisfied.

Reasonably required

The FTT then turned its attention as to whether the information HMRC sought in the information notice was reasonably required to check Monks’ tax position.

HMRC argued it had a suspicion of a loss of tax, but did not know what, if any, income Monks had derived from the other companies, or indeed from any other source. In a situation where it was known that the declared income in the year did not suffice to cover expenditure, it was reasonable for HMRC to seek information about Monks’ tax position in that year and to ascertain all relevant sources of income or capital.

The FTT agreed – where condition B is satisfied, as it was in this case, HMRC was entitled to know the full facts related to Monks’ tax position so that it could make an informed decision whether and what to assess.

While the FTT allowed the appeal in respect of the validity of the enquiry notice, it dismissed Monks’ appeal regarding the schedule 36 information notice and the requirements within.

With self assessment season kicking into full swing, this case serves as a timely reminder to hold onto evidence of correspondence with HMRC.

Replies (15)

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the sea otter
By memyself-eye
30th Nov 2023 17:47

Two fleas dancing on the head of a pin?

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By FactChecker
30th Nov 2023 19:03

"this case serves as a timely reminder to hold onto evidence of correspondence with HMRC."
Huh? How does it do that?

"Monks produced WhatsApp messages with pictures of the enquiry letter that were dated 1 February 2022. Monks’ evidence, which the FTT found credible, was that his post box was checked every day and that any mail relating to his financial affairs was sent immediately to his accountant."

No idea why the FTT found this (third-hand and uncorroborated claim) 'credible' - but it hardly amounts to 'evidence of correspondence with HMRC' (or of the date of delivery by HMRC).

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Replying to FactChecker:
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By Justin Bryant
01st Dec 2023 08:59

Not sure what you mean. Judges are entitled to find (and infer) facts as they please on the evidence. That's a basic principle of English law. So it always pays to put in whatever evidence is available that supports your case. That's how legal cases can be distinguishable "on the facts" (as found by the judge).

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Replying to Justin Bryant:
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By Justin Bryant
01st Dec 2023 12:40

Here's an example of a taxpayer doing better re evidence to support their case than HMRC:

https://www.step.org/industry-news/ftt-overturns-uk-income-tax-and-cgt-c...

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Replying to Justin Bryant:
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By FactChecker
01st Dec 2023 12:53

Thanks - and a better example indeed.

Not only did the taxpayer put real effort into constructing/supporting his case, but - as is so often the case nowadays - HMRC were lazy/incompetent.

"The FTT was critical of HMRC’s case. The hearing had already been deferred from April 2022 due to 'inadequate marshalling of evidence' by HMRC at the time, said the FTT. 'In a case where the total amount in dispute is nearly GBP1 million, we would expect HMRC to take more care in preparing the hearing bundle and making sure that it contains all relevant material properly arranged, particularly so when their failings had already been pointed out to them some months previously by a judge of this Tribunal’"!

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Replying to Justin Bryant:
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By FactChecker
01st Dec 2023 12:48

I meant what I thought/hoped that I'd said.

Even if 'correspondence with HMRC' is taken to be bi-lateral (i.e. both to & from), it is a taken (to me) that only correspondence which involves HMRC at one or other end of the action fits that description.
Whereas in the case as reported, letters from HMRC received by the taxpayer were then scanned/forwarded by the taxpayer to a 3rd-party (an activity that doesn't involve HMRC).
Fair enough, but adducing from that the dates on which the taxpayer received the original letters (from HMRC) is mathematically unsound - in that it sets a bar on the sending date in one direction, but not both directions, of time.

My quibble wasn't per se with the judge's finding, but with the author's statement that this was an exemplar of 'retaining the evidence'. Keeping copies of anything even vaguely related (if only to drown the opposition in paperwork) is a well tried & proven methodology, but doesn't make all of it evidence.

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Replying to FactChecker:
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By Justin Bryant
04th Dec 2023 08:59

I still don't know what you mean. For example, this morning HMRC withdrew a £100 late filing ATED penalty for a client coz in my grounds of appeal I included evidence of the date the paper ATED return was sent to HMRC (well before the 30.4.23 deadline). It's no more complicated than having appropriate evidence of the relevant date(s) for your appeal and why wouldn't the judge (or any other judge) not find such evidence acceptable? He/She would have to find that the taxpayer/agent was lying wouldn't he/she?

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Replying to Justin Bryant:
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By FactChecker
04th Dec 2023 10:33

We may be going round in circles ... but one last try.

As I previously said: "in the case as reported, letters from HMRC received by the taxpayer were then scanned/forwarded by the taxpayer to a 3rd-party (an activity that doesn't involve HMRC)."
And, without any suggestion of the taxpayer lying, nevertheless there is still no evidence as to how long *before* that action HMRC actually sent the letter (or indeed it was received by the taxpayer) - which was the key here.

Whereas in the scenario you've just described, you "included evidence of the date the paper ATED return was sent to HMRC" (an activity that obviously does involve HMRC) - and that was the key there.

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Replying to FactChecker:
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By Justin Bryant
04th Dec 2023 10:47

So you now agree there's nothing odd/unsurprising in the above case re the WhatsApp messages being acceptable evidence re dates and so for that reason you agree with its outcome allowing the taxpayer's appeal?

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Replying to Justin Bryant:
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By FactChecker
04th Dec 2023 14:59

Oh dear ... I never said that I disagreed with the outcome of the case.

Indeed as a non-lawyer (who continues to hope forlornly for the spirit to trump the letter of the law), HMRC were cutting it ludicrously fine:
* they claimed (which the FTT accepted) to have posted the notice of enquiry to Monks on 27 Jan 2022 ... only one day short of the maximum (up to 12 months after the day an on-time return is delivered which in this case was 29 Jan 2021);
* and that was a Thursday - so was unlikely to be received that same week (and therefore out of time).

My point, for the final time as I've repeated it 3 times now, related to the article above (not the FTT findings) ... specifically that:
- the WhatsApp messages do not, in themselves, provide evidence of the date when HMRC's letter was delivered (i.e. received by the taxpayer);
- they prove that the letter was received sometime prior to the date of WhatsApp message - but not how many days prior to then (could be same day / could be a week ago or anything else in the past).

Frankly if HMRC had sent the notice of enquiry a fortnight earlier, then I doubt the FTT would have been so willing to rely on the WhatsApp timeline.
In short, HMRC torpedoed their own case (as so often) ... but the article is IMHO wrong to take from all that that 3rd-party messages (which don't incorporate HMRC in the chain) are to be regarded as evidence of HMRC actions.

Anyway, the birds need feeding and the daylight is fading - so that's my final word on this particular topic.

Thanks (1)
Replying to FactChecker:
Stepurhan
By stepurhan
01st Dec 2023 13:23

FactChecker wrote:

No idea why the FTT found this (third-hand and uncorroborated claim) 'credible' - but it hardly amounts to 'evidence of correspondence with HMRC' (or of the date of delivery by HMRC).


I think it is more that they found the taxpayer credible and that there was corroborating evidence of his regular habits for post to support his assertions.
i.e. it was not simply a case of him claiming he took the picture the day the letter arrived.
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By towat
01st Dec 2023 09:37

In my recent experience the date on a letter from HMRC can be up to 2 weeks prior to it being received.

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Replying to towat:
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By Self-Employed and Happy
01st Dec 2023 10:19

If you're lucky!!!

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Replying to towat:
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By JamesDS
01st Dec 2023 17:06

HMRC admitted in Lancashire et al vs HMRC that they routinely date letters for when they think they might arrive, but then dump then in a tragically awful internal post handling system and then send them second class. I have seen letters arrive both months after letter date and days before the letter date. HMRC nevertheless routinely post-dates letters, and it is quite likely that they do this specifically to avoid limitations placed upon deemed delivery date by The Interpretation Act 1978 S7 and Queen's Bench Division Practice Direction [1985] 1 All ER 889.

I advise everyone I speak to about this to write the received date on every single letter they get from HMRC, because those dates can and do trip people up everywhere HMRC rely on them in court - enquiries and FN/APNs in particular.

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By Mr J Andrews
01st Dec 2023 15:03

Rumour has it that the FTT members were ###### off with the general slapdash approach by HMRC with its mailing system. As one FTT guy said .........''I received my SA316 { Notice to file 2022/23 Return }, which was dated 6 April on 15th May''. Another said .....''I can beat that by another 4 weeks''.
The third member agreed this continuing deterioration under its current incumbency leaves little doubt of late delivery.
Next case please.

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