A recent tribunal has threatened to cause huge trouble for UK businesses. It ruled that HMRC are within their rights to demand documents that are over 8 years old, even if they’ve already been submitted and then subsequently been lost or destroyed by the taxman.
The bizarre ruling was made in relation to the Whitefields Golf Club. In 2003 HMRC became suspicious about a restructuring undertaken by the club in 1999. Documents were requested from Whitefields which were sent in in February 2004.
HMRC then lost interest and did nothing until 2011 when they decided to pick the case back up. By this point the papers submitted by Whitefields had been lost or destroyed and so, under the Finance Act 2008, HMRC requested them once more.
Understandably, Whitefields made the argument that this was unreasonable considering the slow nature of the investigation and that HMRC were at fault for losing their documents.
The tribunal eventually ruled in HMRC’s favour setting a new precedent where the taxman is no longer obligated to actually look after the information submitted by the UK’s citizens and businesses.
Mamoon Chaudhary, a tax expert at Oxley and Coward Solicitors, said:
“This ruling is a challenge for individual taxpayers as much as business as it suggests that HMRC can go back as far as they want for information. We are all comfortable with the six year rule, so this appears to stand things completely on their head. It will probably be some time before we know how this is going to be interpreted by HMRC in practice.”