Jimenez v FTT and HMRC – An increase in HMRC’s power against non-UK residents!

Following a Court of Appeal ruling here in the UK, a major power shift based on the extra territorial powers of HMRC in relation to a Schedule 36 notices has occurred. The ruling outline below has swung the balance firmly in HMRC’s favour as far as non-UK residents with a UK tax liability are concerned.


British born Mr Jimenez had been previously been tax resident in the UK and now lives in Dubai, with the exact period of UK residency disputed. HMRC are investigating his previous and current UK tax position, leading them to issue a Schedule 36 notice to him at his address in Dubai.

Attached to the notice was a schedule of the requested information which Jimenez was to produce, including details of bank and credit card accounts since 6 April 2004 and a schedule of his visits to the UK between that date and 5 April 2013.

A Schedule 36 Finance Act 2008 notice gives HMRC the power to obtain documents or inspect business premises where reasonably required if the taxpayer refuses to co-operate.

Previously, a judicial review at the High Court found that HMRC could not lawfully issue the notice to a person that was not resident in the UK during the relevant period.


HMRC took the case to the Court of Appeal (CA) for consideration. Interestingly, Jimenez only argued that the notice could not be issued to a non-resident, not that the information was unjustly requested.

The argument Jimenez put forward centred around that overturning the high court’s ruling would be contrary to international law. Allowing HMRC extra territorial powers would offend state sovereignty, violating the principle that a state must not enforce its laws on the territory of another state without that other state’s consent.

The legislation does not mention a restriction to UK residents although, it was generally accepted in the past that UK legislation, by implication, apply to persons that are present in the UK.


The Court of Appeal overturned the High Court ruling, finding that HMRC did not breach international law. Their ruling was based on Jimenez simply having to provide the information and documents to HMRC in the UK as part of its investigation of his self-assessment. The notice did not require the performance of any official act in that overseas territory.

Taking the ruling further the Court of Appeal decided that the intentions of Parliament was not to restrict the powers to taxpayers based in the UK. The appeal was therefore accepted in HMRC’s favour due to their power to investigate UK tax affairs regardless of resident status.


The implications of the Jimenez ruling are massive for non-UK residents with a tax liability moving forward. Whereas previously HMRC would be required to use the cumbersome International Information Exchange Request, they now have a quick procedure to gain any required information.

Gone are the days where foreign entities, such as banks and trusts companies, could simply throw a Schedule 36 straight in the bin, now they need to stand up and think carefully about their next steps.

With HMRC having the ability to freeze UK assets of non-UK resident individuals where a Schedule 36 notice is ignored, compliance is essentially compulsory or the taxpayer will have a potentially very uncomfortable experience on their hands.