Spc00592

SECTION 19A NOTICE – whether entitled to require evidence of gift aid payments related back to and allowed in previous year – yes because the payments were contained in the return (s 9A Taxes Management Act 1970) – appeal dismissed

THE SPECIAL COMMISSIONERS

	A J  EDER	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		Special Commissioner: 	DR JOHN F. AVERY JONES CBE 

Sitting in public in London on 6 February 2007

Stephen Chevern, Passer, Chevern & Co, Chartered Accountants, for the Appellant

Anne Aldridge, HM Revenue and Customs Appeals Unit, Eastern England, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

1.	Mr A J Eder appeals against a Notice under s 19A of the Taxes Management Act 1970 (“TMA”).  He was represented by Mr Stephen Chevern and the Revenue was represented by Mrs Anne Aldridge.
2.	The Notice requires “evidence of payment of the amount paid to each charity between 6 April 2003 and 5 April 2004.”  Originally it asked for other details but the Revenue have dropped these.
3.	The Appellant’s tax return for 2003-04 contained the following entries relating to gift aid:
Box No		Amount in Return £	Amount as revised £	
15A.1	Gift Aid payments made between 6 April 2003 and 5 April 2004	12,509	12,509	
15A.2	Amount of one-off payments included in 15A.1	12,509	12,509	
15A.3	Gift Aid payments made after 5 April 2003 but treated as if made in the tax year 2002-03	19,645	9,822	
15A.4	Gift Aid payments made after 5 April 2004 but treated as if made in the tax year 2003-04	9,822	nil	
15A.5	Total relief claimed in 2003-04	2,686	2,686	
4.	Since the figure in box 15A.3 for the payments related back exceeded the total payments in the year in box 15A.1 the return contained an obvious error and I deduce this was the cause of an enquiry being opened on 8 December 2005.  On 26 January the Appellant’s accountants, Passer, Chevern & Co, agreed that there was an error and the figures should have been as set out in the right-hand column above.  The letter enclosed a list of payments made in 2003-04 totalling £12,509.  The Inspector then asked for evidence of payment of all of these.  The accountants provided evidence of the payments claimed for the year of £2,686 but declined to provide evidence of all payments made in the year because asking for evidence of payments that had been related back and allowed for the previous year was not, they considered, required on an enquiry into the return for 2003-04.
5.	Mr Chevern repeated that contention before me.  He also contended that the Notice was unreasonable in requiring evidence of payment when the Revenue’s website stated in the section Charities – Donors – Frequently asked questions – What records do I need to keep?  “Details of all gift Aid payments made in a tax year (6 April to 5 April), the name of the charity, the amount and date of payments.”  He contended that information about the Appellant’s payments would in any case be available to the Revenue from the charity’s repayment claims.
6.	Mrs Aldridge contended that 
(1)	under s 9A TMA:
“(1) An officer of the Board may enquire into a return under section 8 or 8A of this Act if he gives notice of his intention to do so (“notice of enquiry”)—
  (a) to the person whose return it is (“the taxpayer”),
  (b) within the time allowed.
…
 (4) An enquiry extends to anything contained in the return, or required to be contained in the return, including any claim or election included in the return, subject to the following limitation….”
Here the figure for payments made in the year were contained in the return as was the election to treat some of these as paid in the earlier year included in the return, and so both were within subs (4).
(2)	 Alternatively, s 42 TMA (procedure for making claims) by subs (10) “shall apply in relation to any elections as it applies in relation to claims.”  Subsection (11A) provides that Schedule 1B shall have effect as respects certain claims for relief involving two or more years of assessment.  Paragraph 2 of that Schedule provides: 
“2—(1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (“the later year”) to be given in an earlier year of assessment (“the earlier year”).
(2) Section 42(2) of this Act shall not apply in relation to the claim.
(3) The claim shall relate to the later year….”
It follows that the election relates to the later year, 2003-04 and so is covered by the enquiry for that year.
(3)	There was nothing unreasonable in requesting evidence of payment.  The Guide to Self Assessment SA/BK4 refers to gift aid payments and gives the following guidance about the records that a taxpayer will need to keep:
“Personal financial records which support any claims based on amounts you actually paid or which show broadly what you spent, where that is relevant to a particular claim.  Examples of the sort of records that may help to support such claims are bank statements and cheque stubs….”
(4)	She had attempted to obtain the information about the Appellant’s payments from the section dealing with charity repayments but they could not provide the information.
7.	The Tribunal’s jurisdiction is contained in s 19A TMA:
“(1) This section applies where an officer of the Board gives notice of enquiry under section 9A(1) or 12AC(1) of this Act to a person (“the taxpayer”).
(2) For the purpose of the enquiry the officer may at the same or any subsequent time by notice in writing require the taxpayer, within such time (which shall not be less than 30 days) as may be specified in the notice—
  (a) to produce to the officer such documents as are in the taxpayer's possession or power and as the officer may reasonably require for the purpose of determining whether and, if so, the extent to which —
  (i) the return is incorrect or incomplete, or
  (ii) in the case of an enquiry which is limited under section 9A(5) or 12AC(5) of this Act, the amendment to which the enquiry relates is incorrect, and
  (b) to furnish the officer with such accounts or particulars as he may reasonably require for that purpose.
…
 (9) On an appeal under subsection (6) above section 50(6) to (8) of this Act shall not apply but the Commissioners may—
  (a) if it appears to them that the production of the document or the furnishing of the accounts or particulars was reasonably required by the officer of the Board for the purpose mentioned in subsection (2) or (2A) above, confirm the notice under that subsection so far as relating to the requirement; or
  (b) if it does not so appear to them, set aside that notice so far as so relating.”
8.	The question in this appeal arises because s 98 of the Finance act 2002 enables a taxpayer to elect to treat gift aid payments as made in the previous tax year: 
“(1) A person (“the donor”) who makes a gift that is a qualifying donation within section 25 of the Finance Act 1990 (c 29) (gift aid) may elect to be treated for the purposes of that section as if the gift were a qualifying donation made by him in the previous year of assessment.
(2) Any such election must be made by notice in writing to an officer of the Inland Revenue—
  (a) on or before the date on which the donor delivers his return for the previous year of assessment under section 8 of the Taxes Management Act 1970 (c 9) (personal return), and
  (b) not later than the 31st January next following the end of that year….”
9.	In my view Mrs Aldridge is entitled to rely on the plain words of s 9A(4) TMA “An enquiry extends to anything contained in the return.”  The total gift aid payments made in the year were contained in the return and so the enquiry extends to them.  I do not, however, consider that the claim to treat part of these was included in the return; it was in fact made in Box 15A.3 of the previous year’s return as required by s 98(2) of the Finance Act 2002.  Paragraph 2 of Schedule 1B seems to me to relate to losses and not to gift aid payments, but it is not strictly necessary for me to decide the point.
10.	I do not consider that the Revenue is prevented by the frequently asked questions heading on their website from asking for evidence of payments in the form of bank statements when these are referred to in the Guide to Self Assessment.  The website is giving general guidance only.
11.	Accordingly, although I am sympathetic to Mr Chevern’s point that enquiring into the payments made in the year is indirectly extending the enquiry to payments allowed in the previous year, I consider that the evidence required by the Notice is within the plain words of s 9A(4) TMA and was reasonably required for the purpose of determining whether the return was correct.  I dismiss the appeal and confirm the Notice.

JOHN F. AVERY JONES

SPECIAL COMMISSIONER
RELEASE DATE: 14  February 2007

SC 3189/06