SVM30100 - Share Valuation Manual: Reminding and Statutory Notices

SA – Taxpayer not a Company

1. Under Section 19A Taxes Management Act 1970, the Officer dealing with an SA enquiry can issue a notice to a taxpayer, requiring him/her to:-

a) produce documents or

b) accounts or particulars

which are reasonably required to determine whether, and if so to what extent, the return is incorrect or incomplete.

The notice issued by the tax office must stipulate a time limit (usually 30 days) during which the information/ documents must be provided. If the taxpayer appeals against the notice, the appeal is to the General Commissioners. [Grounds of appeal would be e.g. that the information requested was not reasonably relevant to determining if the account is complete and correct.] If the notice is confirmed by the Commissioners, the taxpayer has 30 days from the date of the determination of the appeal in which to comply. Failure to comply with a confirmed notice will result in the imposition of penalties, including daily penalties.

2. Four points about the S.19A procedure should be noted:-

• the process can only be used in SA cases where there is an open enquiry
   
• You can only use it to obtain information/documents. Information means factual material which you require to make a valuation. It does not include the taxpayer’s opinion of value, arguments supporting that opinion or an acceptance or rejection of a valuation proposal you have made previously. So as to avoid difficulties in this area and whilst you should put forward your opinion of value as soon as you can, you should not generally put forward a value to taxpayers/agents at the same time as you are seeking from them information which you need in order to come to a firm opinion on that value.
   
• Section 19A is designed to obtain first party information i.e. information held by or which was available to the taxpayer. There are powers (see SVMXXXXX point 3 and 4) for obtaining third party information but a case should be referred to either Information Support or the Appeals Team before recourse to these third party powers is attempted.

3. Before we ask for a S.19A Notice

3.1 If information needed to formulate an opinion of value cannot be obtained through official channels such as Companies House or the company tax file, you should request it from the agents (or the taxpayer if he/she is acting in person).

3.2 Your first reminder should ask for a reply to your questions/provision of the requested documents or for an explanation of why the reply/documents cannot be provided. If the agents/taxpayer appear to have genuine problems which they are trying to overcome before replying, you should allow some further time for a reply to be provided – and you should always bear in mind the difficulties which might be encountered in gathering information to deal with particularly complex observations. However, unless there are such special circumstances, if the first reminder does not elicit a response, then, subject to your Team Leader’s approval, your second reminder should state that, failing a substantive reply within 28 days, you intend to ask the instructing district to issue a notice to the taxpayer under S.19A TMA. [See example at Appendix A.] If the second reminder produces no reply, you should – again subject to your Team Leader’s approval – inform the person with whom you have been corresponding that you are asking the Inspector to issue a notice to the taxpayer under S.19A TMA (see example at Appendix B). That letter should be copied to the taxpayer (if you have been dealing with agents and are sending the original to them).

3.3 You should complete form Val 222 (Appendix C) and a schedule of requested information to notify the Inspector of your need for a S.19A notice to be issued.

3.4 The letters at Appendices A, B and C are illustrative and should be adapted to accord with the facts of the particular use. Val 222 is available as a template on computer.

3.5 It is emphasised that the S.19A notice is intended as an easy-to-use means of progressing our enquiries. Whilst we should be aware of taxpayers’ or agents’ real difficulties in obtaining information and should be sympathetic where attempts are clearly being made to satisfy our requirements, if delays persist in spite of promises, the Team Leader may wish to proceed to a S.19A notice. In such cases, the standard letters would need to be modified to reflect the particular circumstances of the case.

4. Liaison with Inspector

Once you have issued the Val 222, you should liaise closely with the Inspector (preferably by telephone) as to how the process is going. The Inspector may want to consult you if, for instance, he/she is uncertain about the need for the required information – as he/she may need to explain this (in general terms) to the General Commissioners. The Inspector should keep you informed of developments – issue of notice, any appeal, listing of the appeal etc. When he/she has been provided with the required information, this will, of course, be passed on to you. You, for your part, should notify the Inspector immediately if any of the requested information is provided direct to you after the issue of the Val 222 – as the Inspector might need to modify the notice or not proceed with it at all.

A process map is at Appendix D.