In response to the appellant’s application for a tax return enquiry closure notice, the First-tier Tribunal held that HMRC had no reasonable grounds to maintain an enquiry where the appellant’s evidence was that outstanding information and documentation did not exist. 

On 18 June 2018, the appellant (a charitable company) submitted its corporation tax return for the accounting period ending 30 June 2017. The appellant’s accounts, on which the tax return was prepared, included payments made in the sum of £821,000, reducing the appellant’s creditor’s balance to a company (AI). The payments were viewed by the appellant’s trustees as payments made wholly for the purposes of the charity and, as such, that tax relief was due to them. 

On 6 June 2019, HM Revenue and Customs (HMRC) opened an enquiry into the appellant’s return. HMRC requested information as to the nature of expenditure and related party