If you are asking the Commissioners to consider the issue of
a notice you should consider the impact on the taxpayer of the
costs of compliance with it and the words of Mummery J in Kempton v
Special Commissioners and CIR (TCL3337).
“..In some cases, having regard to all the circumstances, including the amounts involved and the likely cost of compliance, it may not be reasonable for an inspector to require at one sweep extensive particulars going back over a number of years”.
Where a notice is appropriate you should inform the
Commissioners that the taxpayer will have to bear the costs of
compliance. You should also be prepared to provide any information
you may have about the taxpayer's ability to meet these costs if
they do not attend.
The reason for this is that any appeal against a penalty for
non-compliance is defended by HMRC and not by the Commissioners.
The decision in the Kempton case raises the possibility of a
defence on the grounds of `reasonable excuse' due to cost. The more
detailed and extensive the information required by the notice, the
more HMRC will need to show that, in its opinion, it is reasonably
required.
The burden of proof lies on the taxpayer but if a prima facie
case of `reasonable excuse' is set out, we have to be prepared to
justify our actions. This includes justifying the material sought
in relation to the information necessary to determine the tax
liability under appeal, the likely costs involved and what is known
about the taxpayer's means. A record of your consideration of this
point should be kept on the file.
