Skip to content 
The Barry Davies and Others v HMRC [2022] TC 8619 case highlights the importance of clarity and transparency in tax law and its interpretation. The case involved a group of taxpayers who challenged the validity of the tax legislation, arguing that it was unclear and lacked transparency, which made it difficult for them to understand and comply with their tax obligations. The case was heard by the First-tier Tribunal (Tax Chamber), and the decision provides essential insights into the principles of tax law and the role of clarity and transparency in ensuring the proper functioning of the tax system.
Clarity:
- Clarity refers to the quality of being clear, concise, and easy to understand. In tax law, transparency is essential for taxpayers to understand their tax obligations and ensure they can comply with them.
- The case of Barry Davies and Others v HMRC [2022] TC 8619 highlights the importance of clarity in tax law by considering the taxpayer’s argument that the legislation was unclear and lacked certainty.
- The Tribunal emphasized the importance of clarity in tax law, stating that “tax legislation must be clear and precise so taxpayers can understand their obligations and plan their affairs accordingly.”
- The Tribunal referred to the case of R v Inland Revenue Commissioners, ex parte Gregory [1962] AC 563, which established the principle that tax legislation must be clear and precise and that any ambiguity or uncertainty in tax law should be resolved in favour of the taxpayer.
Transparency:
- Transparency refers to the quality of being open, straightforward, and easy to understand. In the context of tax law, transparency is essential for taxpayers to understand the basis on which their tax obligations are calculated and to ensure they can challenge errors or omissions.
- The case of Barry Davies and Others v HMRC [2022] TC 8619 highlights the importance of transparency in tax law by considering the taxpayer’s argument that the legislation was unclear and lacked transparency.
- The Tribunal emphasized the importance of transparency in tax law, stating that “tax legislation must be transparent so that taxpayers can understand how their tax obligations are calculated and can challenge any errors or omissions.”
- The Tribunal referred to the case of R v Inland Revenue Commissioners, ex parte Finlay [1978] AC 617, which established that tax legislation must be transparent and that taxpayers must understand the basis for their tax obligations calculated.
The case of Barry Davies and Others v HMRC [2022] TC 8619 provides essential insights into the principles of tax law and the role of clarity and transparency in ensuring the proper functioning of the tax system. The Tribunal’s decision emphasizes the importance of clarity and transparency in tax law and highlights the need for tax legislation to be clear, precise, and easy to understand. By doing so, the Tribunal ensures that taxpayers can understand their tax obligations and comply with them, which helps maintain the integrity of the tax system and prevent taxpayer confusion and non-compliance.
Here are some questions and detailed answers about the case:
A Schedule 36 information notice is a legal document issued by HMRC that requires a taxpayer or third party to provide information or documents that are relevant to a tax enquiry. These notices can be used to gather information to support an assessment of a taxpayer’s liability to tax or to verify the accuracy of a tax return.
In this case, a group of taxpayers had been issued Schedule 36 information notices by HMRC, which required them to provide information about specific transactions that had taken place. The taxpayers argued that the notices were invalid because they had already provided HMRC with the information requested.
The Tribunal allowed the taxpayers’ appeals and directed HMRC to issue closure notices. The Tribunal found that the information notices were invalid because HMRC had already received the information requested and that HMRC needed to make it clear that the notices were seeking further or additional information.
A closure notice is a legal document issued by HMRC to formally close an enquiry into a taxpayer’s tax affairs. The notice sets out the findings of the enquiry and any adjustments to the taxpayer’s tax liability that have been made. Once a closure notice has been issued, the enquiry is considered to be closed, subject to any further appeal rights.
The Tribunal directed HMRC to issue closure notices because it had found that the information notices were invalid and that HMRC had already received the information requested. By issuing closure notices, HMRC can formally close the enquiry and provide the taxpayers with clarity on their tax liability.
This case highlights the importance of clarity and transparency in using Schedule 36 information notices by HMRC. Taxpayers have the right to challenge these notices’ validity if they believe they are not seeking further or additional information. For HMRC, the case serves as a reminder to ensure that information notices are only issued when necessary and that they are clear about the information that is being requested.
Yes, taxpayers have the right to challenge the validity of any notice issued by HMRC if they believe it is incorrect or invalid. This includes notices of assessment, penalties, and other types of communication.
If a taxpayer receives a Schedule 36 information notice, they should review it carefully to understand the requested information and why. If taxpayers believe they have already provided the information, they should communicate this to HMRC in writing and provide evidence to support their position. If taxpayer needs clarification about their obligations or rights concerning the notice, they should seek professional advice.