A LANDMARK tax ruling has led to a warning for businesses to be careful when discarding historic paperwork.

Under existing rules, the law requires them to retain documentation going back six years.

In the lengthy case of Whitefields Golf Club Ltd and others v HMRC, over a routine VAT inspection following a restructuring of the golf club’s activities, it was ruled the club had to supply copy documents to HMRC.

This was despite the club handing the documentation over in 2004, which HMRC had since lost or destroyed.

The ruling said that it was reasonable for HMRC to demand copies of certain documents that taxpayers had already provided eight years earlier.

The investigation resumed in 2011 following another VAT inspection in 2010 and, despite Whitefields arguing it would be unreasonable to provide the documentation again after it had been lost, the tribunal ruled in HMRC’s favour.

Elizabeth Armstrong, partner at Latimer Hinks Solicitors, said: “This is a challenge for taxpayers, as it suggests HMRC can go back as far as they want.”

HMRC’s request was made under paragraph 1 of Schedule 36 to the Finance Act 2008, which gives officers of HMRC powers to obtain information and documents.

However, the tribunal did say HMRC can only require a person to produce a document if it is in that person’s possession or power.