Edward Lam Shang Leen v The Commissioners for HMRC

Decision date: 5 May 2023

Neutral citation: [2023] UKFTT 407 (TC)

Overall AI summary confidence: high

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Short overview

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AI confidence in this short overview: high

Dr Edward Lam Shang Leen appealed against an HMRC information notice issued under Schedule 36 FA 2008 seeking company records to check his 2017–18 self‑assessment. The Tribunal found Condition B (reason to suspect under‑assessment) was met because of a large unexplained discrepancy between substantial personal bank lodgements and low company turnover, and held the company documents were "reasonably required." The appeal was dismissed, the Notice confirmed with specified amendments, and the appellant ordered to comply within 30 days.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: high

Where a taxpayer who controls a company shows a substantial, unexplained discrepancy between personal receipts and the company’s reported turnover, HMRC can have objectively reasonable grounds under Condition B para 21(6) Sch 36 to suspect a tax under‑assessment, and company records can be "reasonably required" to check the taxpayer’s self‑assessment if there is a rational connection between those records and the investigation.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The Tribunal made observations about the public interest in correct tax assessment and the investigatory purpose of Schedule 36, and noted that a personal service company does not necessarily shield company records from relevance to a director‑shareholder’s personal tax enquiry; it also remarked on the finality of decisions under para 32(5) Sch 36.

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