This Regulation deals with the powers previously enacted under
Section 51 of the Taxes Management Act 1970 and known colloquially
as 'precepts' - a term that was not used after the 1952 Act.
The Commissioners may serve a notice requiring any party,
within a time limit specified in the notice, to
Regulation 10 is therefore an information power. But HMRC has
information powers of its own. In particular, it has powers under
TMA70/S19A and FA98/SCH18/PARA27 in connection with enquiries and
the power to call for documents under TMA70/S20. You should only
ask the Commissioners to issue a Regulation 10 notice in
circumstances when you are unable to use HMRC’s own powers.
EM2270 mentions some occasions when you may want to invite the
Commissioners to exercise their powers.
Regulation 10(1)(a) is used to obtain secondary material,
including profit and loss accounts and balance sheets, together
with supporting tax computations. Regulation 10(1)(b) is used to
obtain access to primary records. Regulation 10(1)(b) can only run
if the material in question is already in existence and in the
possession of the taxpayer or if he has the power to obtain it.
This Regulation applies on any proceedings taken before the
Tribunal. It may be initiated by the Tribunal in the course of
hearing of any matter whatsoever. The Crown may only suggest to the
Tribunal that an order under Regulation 10 might be appropriate in
order to assist the Tribunal in determining the proceedings
currently before it. A Tribunal is entitled to reject the
suggestion that a Regulation 10 Order be issued and may decide to
hear the case.
The initial penalty for failing to comply with an order is
£300. It is important to set the date for compliance at least
one day before the Commissioners' first meeting. Theoretically, it
is possible to comply with an order that expires on, say, 16
February, up to midnight on that day. This has been the subject of
litigation in the High Court
(see Johnson v the Blackpool Commissioners and
Commissioners of Inland Revenue 70TC1). In an interesting
and amusing case the Judge held that one minute to midnight was
'totally unreasonable'.
It is important to have regard to the costs of compliance
(see AH3735). There is case law on this. Care needs to be taken in
regard to 'particulars' which may need to be generated by an
accountant in order to comply with the Notice.
If the failure to comply with the notice continues after the
award of the initial penalty of £300 the Commissioners can
award daily penalties not exceeding £60 per day. The
Commissioners should be advised of the number of days of failure
and asked to award a penalty per day. This should be noted on the
65 list and form 133. Alternatively, in an enquiry case you may
consider bringing the enquiry to a conclusion by issuing a closure
notice.
After the second set of ongoing penalties (i.e. daily
penalties) have been awarded under this Regulation, the case should
be seen by Cross Cutting Policy. (See EM5758.)
If, after the award of three penalties (i.e. an initial
penalty and two sets of ongoing penalties on a daily basis)
compliance has not occurred, consideration should be given to
asking the Tribunal to determine the matter other than by a further
penalty.
