Reasonable requirement

Whether information notices preclude a closure notice

The taxpayers were trading subsidiaries of a shell company. They applied to the First-tier Tribunal for closure notices in relation to enquiries into their claims for consortium relief. HMRC issued information and third-party notices to determine broadly whether the sums claimed were correct.

The taxpayers said the information requested by HMRC in the notices was not relevant to their consortium relief claims so the department did not have reasonable grounds for pursuing the information and should have closed the enquiries.

The First-tier Tribunal had to decide whether the questions about the purpose of the transactions constituted reasonable grounds for continuing the enquiry. The matter concerned the application of CTA 2010 s 146B. In essence this prevents groups implementing arrangements to confer a tax advantage. The tribunal decided that although the arrangements did fall within s 146B(3)(a) ...