“ …it is information or a document which the person is required to keep and preserve under or by virtue of - (a) the Taxes Act, or (b) any other enactment relating to tax”
[15]Section 12B(1) Taxes Management Act 1970 in so far as relevant for present purposes requires an LLP “to keep all such records as may be requisite for the purpose of enabling [it] to make and deliver a correct and complete return …”. Mr Rowson on behalf of the appellant agreed the finding in Couldwell Concrete Flooring Ltd v HM Revenue & Customs [2015] UKFTT 136 at [43] that bank statements form part of a taxpayer’s statutory records. The reasoning was set out at [23-25] in the context of the record keeping requirements for companies: “ 23. In our view paragraph 21(1)(a) requires a company to keep all records which are necessary to establish, without doubt, that a return is accurate. That will include all documents and information necessary to establish the sales, purchases, assets and liabilities of the company in the relevant accounting period and at the end of the accounting period. The requirement that the return must be correct and complete implies a requirement that the documents and information to be kept must evidence that the return is correct and complete.[24]What is needed may depend to some extent on the nature of the company’s business…[25]In our view it is plainly necessary for any company seeking to prepare a correct and complete tax return to have records of sales, purchases, receipts, payments, trade debtors and other debtors. If a business operates a bank account it will need to keep a record of transactions on the account and of the balance on the account at any particular time to ensure that receipts and expenditure have been properly recorded. Not just in the company’s accounting records but also that the transactions and balance on the account have been properly recorded by the bank.”[16]Mr Rowson accepts that the bank statement in the present case is a statutory record. However he seeks to distinguish and to treat separately the information contained in the bank statement. He argues that certain of that information is not required for the purpose of making a correct and complete return, and therefore such information is not a statutory record. Further, Mr Rowson argues that the information which has been redacted is not reasonably required by HMRC for the purpose of checking the appellant’s tax position.[17]There is simply no basis for the appellant to argue that whilst the bank statement is a statutory record, the Appellant is entitled to redact information in the statutory record before providing a copy to HMRC. There is no authority to support such a submission and it is inconsistent with the scheme of Schedule 36.[18]We accept Mr Shea’s submission on behalf of HMRC that where a document is a statutory record, HMRC are entitled to full unredacted copies of that document. Further, any argument about whether account numbers are reasonably required is completely irrelevant.[19]It is clear that Schedule 36 distinguishes the provision of information and the production of documents. In order to check the tax position of a taxpayer HMRC may require either the provision of information specified in a notice or the production of a document specified in a notice. In the present case HMRC have required the production of a document rather than the provision of information. In theory, they might have asked for the amounts, dates and parties for each transaction entered into by the appellant in October 2013. That would have been a request for information. However that is not what they asked for. What they required was production of the document itself, the unredacted bank statement.[20]Once it is accepted that a document is a statutory record, Schedule 36 provides no right of appeal against an information notice requiring production of that document. The reason for that is clear. If a taxpayer is legally required by the Taxes Acts to keep and preserve a document, there is no reason for the taxpayer to resist production of the document to HMRC. In those circumstances HMRC are entitled to production of the document as a matter of course. They are not required to justify to a tribunal that the document is reasonably required in order to check the taxpayer’s tax position. The nature of the document, as one that is required to enable the taxpayer to make a correct and complete return, leads to what is in effect an irrebuttable presumption, at least as far as the tribunal is concerned, that it is reasonably required for the purposes of checking the taxpayer’s tax position.[21]On that basis the appellant’s grounds of appeal must fail.[22]Further, the present appeal is an appeal against a penalty imposed for non-compliance with the information notice. If a person fails to comply with an information notice, paragraph 39 (1)(c) and (2) Schedule 36 provide for a £300 penalty. Paragraph 45 provides that a penalty shall not arise under paragraph 39 in the event that the person has a reasonable excuse for the failure. Paragraph 46(1)(a) then provides that where a person becomes liable for a penalty under paragraph 39, HMRC may assess the penalty.[23]Paragraph 47 Schedule 36 provides for a right of appeal to the Tribunal against a decision that a penalty is payable or against the amount of a penalty. On an appeal against a decision that a penalty is payable, paragraph 48 provides that the tribunal may confirm or cancel the decision. On an appeal against the amount of a penalty, paragraph 48 provides that the tribunal may confirm the decision or substitute another decision that HMRC had power to make.[24]It is notable that the appellant did not seek to appeal the information notice. For the reasons given above it was correct not to do so. The unredacted bank statement was a statutory record for the purposes of Schedule 36 and there was no right of appeal.[25]Indeed, there is authority that this tribunal has no jurisdiction to consider the validity of an information notice on an appeal against a penalty. In PML Accounting Limited v Commissioners for HM Revenue & Customs [2017] EWHC 733 (Admin) the Administrative Court was concerned with penalties arising from non-compliance with an information notice. It held that the tribunal has no jurisdiction to consider the validity of the information notice on an appeal against penalties imposed for non-compliance. Sir Ross Cranston sitting as a High Court Judge stated as follows: “[66]…The right to appeal a penalty set out in paragraph 47 of Schedule 36 of the 2008 Act is against "(a) a decision that a penalty is payable by that person under paragraph 39, 40.." or against the amount (not relevant in this case). Under paragraph 48(3) the Tribunal is limited to confirming or cancelling the decision. In a penalties appeal paragraph 39(1) of Schedule 36 applies "to a person who (a) fails to comply with an information notice" where there is liability to a penalty of £300. Paragraph 40(1) for daily default applies "if the failure or obstruction" continues.[67]Thus the issue on appeal whether a penalty is payable under both paragraph 39(1) and 40(1) is the narrow one of whether, in the former case, the person has failed to comply with the notice, and with the latter, whether the failure or obstruction has continued. The validity of the information notice which gives rise to the imposition of a penalty simply does not arise. As the Upper Tribunal in Birkett held at paragraph [42], the right of appeal against the officer's decision to impose a penalty "is simply a question of whether the requirements in para 40" – and by extension paragraph 39 – "have been satisfied".”[26]We are bound by that decision. As a result, the limit of our jurisdiction in the present appeal is to consider whether there was compliance with the information notice.[27]It is not suggested that there was any reasonable excuse for the non-compliance and there is no challenge to the amount of the penalty. In correspondence the appellant argued that the redactions were made for purposes of confidentiality. Schedule 36 does not recognise confidentiality as a basis for non-compliance. No doubt that is because HMRC themselves owe a duty of taxpayer confidentiality.[28]Clearly there was non-compliance with the information notice. The appellant has not produced an unredacted copy of the bank statement which was required by the information notice. The penalty was therefore properly imposed. Conclusion[29]For all the reasons given above we must dismiss the appeal.[30]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JONATHAN CANNAN TRIBUNAL JUDGE RELEASE DATE: 16 OCTOBER 2017