Production of documents by accountant under enquiry
The alleged vindictiveness of a tax inspector was a key factor in a recent Special Commissioners case. In this case, the taxpayer was given notice under section 19 TMA to produce certain documents and information. The taxpayer (who was an accountant) contended that the request for documentation was as a result of his success on behalf of one of his clients in an action before HMRC and that the enquiry was opened “vexatiously and vindictively”.
The Commissioner was concerned not so much with the motive of the tax inspector but with the purpose of the request. The Commissioner commented on two possible scenarios:
1. The enquiry was opened for a “bad purpose” but the tax inspector giving the section 19A notice reasonably required the items for the statutory purpose.
2. That the enquiry was opened for either a good or a bad purpose but the tax inspector gave the notice for the purpose of inconveniencing the taxpayer.
The Commissioner on hearing the relevant evidence concluded that the tax inspectors only gave the notice to determine whether the taxpayer’s return was correct and not out of any desire to be vindictive.