Information about directors’ loan account

HMRC opened an enquiry into the taxpayer’s corporation tax return. It issued FA 2008 Sch 36 para 1 notices to the taxpayer requesting details of the directors’ loan account. A copy of the loan account was sent to HMRC but it said the information was not the fully itemised chronological version requested. So it sent another Sch 36 notice this time to Mr M the owner of the taxpayer. It sent a similar notice in respect of his personal tax affairs. HMRC later imposed a penalty for failure to provide the information against which the taxpayer appealed.

The First-tier Tribunal said that when HMRC was inquiring into the tax affairs of a sole shareholder and his company information about the nature size and timings of payments between them was ‘reasonably required’ by the department. The judge accepted HMRC’s evidence that it was unable to...