Information request was not proportionate

The taxpayer has appealed against a determination for PAYE which HMRC considered arose from a disposal of shares. HMRC requested additional disclosure about the taxpayer’s witness statement.

On HMRC’s request that the taxpayer ‘carry out a reasonable and proportionate search of its databases’ the First-tier Tribunal agreed with the taxpayer that this not ‘particularly clear’. The judge said: ‘Without clearer words it is not possible to determine whether HMRC intended this request to be limited to systems which are more likely to be known to be databases (eg Microsoft Azure Microsoft Access Oracle and similar) or whether they intended it to cover systems which utilise databases without the user necessarily being aware that a database underlies the functionality (eg Microsoft Outlook) and where the user may not have stored the data in any particularly structured way.’ This ambiguity could result in the taxpayer being uncertain...