A practical guide for taxpayers, accountants and advisers, drawing on Dr Robin Garai v HMRC [2026] UKFTT 920 (TC)
Few pieces of HMRC correspondence cause more anxiety than a formal information notice issued under Schedule 36 to the Finance Act 2008. It arrives in plain language, it asks for documents and explanations, and it carries the weight of statutory power behind it. Several features of how these notices operate are easy to read past, and a clearer understanding of them tends to make the difference between a manageable request and an unexpectedly difficult one.
A recent decision of the First-tier Tribunal, Dr Robin Garai v HMRC [2026] UKFTT 920 (TC), is a useful lens through which to examine how these notices actually work. The case itself concerned a locum doctor engaged through an umbrella company, but the principles the Tribunal applied are general ones. They affect anyone who might receive such a notice, and they carry clear lessons for the accountants and solicitors who advise them. This article sets out those principles and the practical steps that flow from them.
HMRC can ask about the future, not just the past.
It is natural to read an information notice as concerned only with tax that has already fallen due, on the basis that HMRC cannot investigate a liability that does not yet exist. The legislation takes a wider view.
HMRC’s power to issue a taxpayer notice exists for the purpose of checking a person’s tax position. The phrase “tax position” is defined in FA 2008, Schedule 36, paragraph 64, and it expressly includes a person’s past, present and future liability to pay tax. The deliberate inclusion of the word “future” is significant. It means HMRC may gather information and documents relating to a liability that has not yet arisen at the date the notice is issued.
This carries a useful reminder for anyone reviewing the timing of a notice. An early notice is not, for that reason alone, an invalid one. HMRC are entitled to look ahead, and the date of a request will rarely furnish a ground of objection in itself.
The filing of a return changes the rules, and the date matters enormously.
Once a taxpayer has filed a self-assessment return for a chargeable period, HMRC’s freedom to issue a taxpayer notice in respect of that period is curtailed. This is among the more technical features of the regime, and one that can be easy to pass over.
FA 2008, Schedule 36, paragraph 21 provides that where a person has made a return under section 8, 8A or 12AA of the Taxes Management Act 1970, a taxpayer notice may not be given for the purpose of checking that person’s income tax or capital gains tax position for the period, unless one of the conditions in that paragraph is met. The most familiar of those is Condition A, which requires that HMRC have opened an enquiry into the return and that the enquiry remains open in relation to the matters covered by the notice.
In other words, if a return has been filed and no enquiry has been opened, and no other condition applies, HMRC cannot simply demand information about that period through a taxpayer notice. The protection is real, but it depends entirely on a question of fact, namely the date on which the return was submitted relative to the date of the notice.
This is precisely where the taxpayer in Garai came unstuck. Neither party put forward evidence of the dates on which his returns had actually been filed. The Tribunal found, on the balance of probabilities, that returns had been submitted, but it could not determine when. Because it could not fix those dates, it could not find that the notice failed Condition A, and so this potentially powerful line of defence simply fell away. The Tribunal even noted that a barrister had earlier been involved but the paragraph 21 point had not been pleaded.
This is a point well worth keeping in mind, and one worth raising gently with clients. Clear, dated records of when each return is filed, together with the submission receipt, are what allow a protection that exists in law to be relied upon in practice. A safeguard is of little use if the facts that trigger it cannot be evidenced. There is a related planning observation: filing accurately and in good time, and being able to show exactly when that was done, preserves the structural protection that paragraph 21 offers and narrows the scope for a notice arriving without an open enquiry to support it.
A notice addressed to you stays your responsibility.
Taxpayers frequently object that HMRC are asking the wrong person. Surely, the argument runs, the documents should be sought from the employer, the agency or some other party who plainly holds them. In Garai the doctor felt strongly that HMRC should approach the umbrella company rather than him, particularly as he had signed a form authorising that company to deal with HMRC on his behalf.
The Tribunal’s answer was unambiguous. The fact that HMRC might be able to obtain the information by another route does not provide a legal basis for finding the notice invalid. The only question is whether HMRC have satisfied the statutory requirements in relation to the person to whom the notice is addressed, the central requirement being that the information and documents are reasonably required to check that person’s tax position. A form authorising a third party to correspond with HMRC does not transfer or discharge the recipient’s own obligation to comply.
Nor is a notice invalidated merely because HMRC are sending similar notices to many people in similar positions. Each notice stands or falls on whether the material is reasonably required to check the tax position of its own addressee.
The tax bill stops with you, even under PAYE.
A related and very important misunderstanding concerns who ultimately bears employment tax. Many employees assume that because their employer operates PAYE, any shortfall is the employer’s problem alone. That is not how the law works.
While the employer is primarily responsible for accounting for the tax under a PAYE scheme, section 13 of the Income Tax (Earnings and Pensions) Act 2003 provides that the person liable for tax on employment income remains the employee. The Court of Appeal confirmed this in Stephen Hoey v HMRC [2022], explaining that the obligation to deduct at source sits with the employer, but the employee’s underlying liability to income tax on employment income is left undisturbed. Liability rests throughout on the employee under the primary legislation.
HMRC also have mechanisms, in defined circumstances, to move responsibility for paying employment taxes from the employer to the employee. These include the powers in regulations 71 and 82 of the PAYE Regulations 2003 and in section 684(7A)(b) of ITEPA 2003. The significance of this for the Garai decision was that, because the liability could fall on the employee, a notice addressed to the employee was properly aimed at checking his own tax position, and not solely that of the employer.
There is a sober warning embedded here for anyone tempted by an arrangement that promises to reduce the tax on their earnings. Where an employer or umbrella company offers a scheme, the ultimate liability does not conveniently disappear onto the promoter. It remains with the individual. A failure to hold supporting documents does not extinguish a liability, and being unable to produce records is not a shield against tax that is properly due.
Possession or power: the word most people forget.
Perhaps the most instructive part of the decision concerns the scope of what a taxpayer can be required to produce. An information notice only requires a person to produce a document if it is in that person’s possession or power, under paragraph 18 of Schedule 36. Most people read only the first half of that phrase. They reason that if a document is not physically in their hands, it cannot be demanded of them. The word “power” defeats that reasoning.
A document is within a person’s power if they could reasonably obtain it, even if they do not currently hold it. The burden of engagement here is shared in a particular way. As the Upper Tribunal confirmed in HMRC v Mattu [2021] UKUT 245 (TCC), approving the approach in Parissis v HMRC [2011] UKFTT 218 (TC), HMRC must first raise a prima facie case that the documents are in the person’s possession or power, after which it falls to the taxpayer to show that they are not. It is acknowledged that proving a negative is hard, but the taxpayer must at least demonstrate a serious attempt to obtain the material.
The point was illustrated vividly in Garai. The doctor’s payslips had been made available online. He argued that he often lost access to such portals once an engagement ended. The Tribunal accepted that this could happen, but found that he had received the notice while still employed by the umbrella company and had simply never looked to see whether the payslips were still accessible. He conceded that he had not tried. Because he had made no serious attempt, he could not show that the documents were outside his power. The same reasoning applied to contracts, agreements and correspondence: these were items he would naturally have had or been able to retrieve from his own bank records and historic emails, and he had offered no evidence of any effort to find them. The Tribunal drew on H A Patel & K Patel v HMRC [2014] UKFTT 167 (TC), where a similar failure to make a genuine attempt to obtain documents from a third party defeated the same argument.
The advisory message is clear and applies well beyond this case. If you receive a notice, you must actually try to obtain the material, and you should keep a record of the steps you take. Download what is available while you still can, request copies from former employers, agencies and banks, and search your own correspondence. A bare assertion that documents are difficult to find, or that someone else holds them, will not discharge the obligation. Even where there is no live dispute at all, this is a reminder of the standing duty to keep records intact and accessible, so that they can be produced if they are ever required.
A notice that asks too much can be cut down, not just struck out.
A final principle offers some reassurance. The Tribunal’s powers on an appeal against an information notice, set out in paragraph 32 of Schedule 36, are not limited to confirming or setting aside the notice. The Tribunal may also vary it. That is exactly what happened in Garai.
Each item must be reasonably required to check the taxpayer’s tax position, and the burden of showing this rests on HMRC, as the Tribunal noted by reference to Cliftonville Consultancy v HMRC [2018] UKFTT 231 (TC). HMRC must identify a genuine tax issue to which the information relates, and the investigation must be legitimate and not in bad faith, as explained in One Call Insurance Services Ltd v HMRC [2022] UKFTT 184 (TC). It is not necessary that a liability will ultimately arise, since a proper investigation may conclude that none does.
Applying that test, the Tribunal removed or narrowed several requests. Items that were really aimed at mapping the wider avoidance arrangement, such as the identities of other participants, intermediaries and end clients, were stripped out because they did not bear on this taxpayer’s own liability. The period was restricted to the dates of the relevant employment, the taxpayer was permitted to redact unrelated outgoings from his bank statements, and a sweeping demand for all correspondence was narrowed to communications about how he would be paid. The notice was upheld, but in a more focused and proportionate form.
For advisers, this confirms that a robust, item-by-item response is worthwhile. Even where a notice is fundamentally valid, parts of it may be excessive, and the Tribunal has the power to pare it back to what is genuinely required.
Practical takeaways.
The Garai decision is, on its face, a modest First-tier Tribunal case about one doctor and one notice. Read carefully, it gathers together several principles that everyone exposed to HMRC’s information powers should understand.
HMRC can ask about future liabilities, not only past ones. Filing a return brings the protection of paragraph 21 into play, but only if you can prove the date you filed. The availability of information from a third party does not excuse you from complying with a notice addressed to you. Under PAYE the employee retains the underlying liability, so an arrangement that promises to reduce tax does not move the risk elsewhere. A document you could reasonably obtain is within your power even if you do not currently hold it, and you must make a genuine, evidenced attempt to obtain it. And where a notice reaches too far, it can be varied down to what is reasonably required rather than abandoned altogether.
Underlying all of this is a simple discipline that protects taxpayers far more reliably than any clever argument: keep accurate records, retain dated evidence of what you filed and when, and respond to HMRC in a considered and documented way. If you have received an information notice, or you advise clients who may, these are the questions to work through before deciding how to respond.
This article is provided for general information and does not constitute tax or legal advice. The position in any particular case will depend on its own facts. References are to Dr Robin Garai v HMRC [2026] UKFTT 920 (TC) and the legislation and authorities cited within that decision.