HMRC have the ability to issue formal information notices of various different flavours.
These may be issued following a failure to respond to an initial “formal” enquiry or may be received by a taxpayer without any such prior notice.
Information notices generally may be issued in the following forms:
HMRC’s ability to enquire into a return would be fettered if HMRC did not have corresponding powers to require taxpayers to provide information to enable them to check a return.
One such information power is the ability to issue a taxpayer with a taxpayer notice. Here, the taxpayer must provide any information that is “reasonably required” for checking his or her tax position.
The power is very broadly drawn, and there is a limited power of appeal.
Prior to FA 2021, HMRC could only obtain information from third parties by issuing a third-party notice.
Such a notice requires the relevant third party to provide information “reasonably required” to check a person’s tax position.
Importantly, such notice may only be issued if either:
Such a notice will usually be issued where HMRC are seeking information for their own enquiries into a taxpayer.
However, in some cases, it might be issued where an overseas revenue authority is conducting an investigation into a taxpayer.
Legislation introduced by FA 2021 allows HMRC to issue a FIN to a financial institution requesting information about a financial institution’s customers for the purposes of domestic or overseas tax investigations.
As the notice can be issued without HMRC first having to obtain the approval of the FTT or the taxpayer, this clearly removes a significant safeguard that existed previously.
The issuing of a notice must be approved by an authorised HMRC officer. The applicable test is whether the information (or documents) requested is or are, in the reasonable opinion of the HMRC officer giving the notice, of a kind that it would not be onerous for the financial institution to provide or produce.
FINs may only be issued to a financial institution and not to any other third party.
The taxpayer will receive a copy of the notice and a summary of reasons why the information is required. It should be noted that the FTT can decide that this requirement can be waived.
There is no appeal against an FIN. As such, the only way to challenge the issue of the notice would be a judicial review.
The usual restrictions that apply to a “Schedule 36” information notice will also apply to FINs. For example, a person is only required to produce something that is within his or her “possession or power”.
If you receive an kind of Information Notice from HMRC then you should act immediately. Please let us know if you require any assistance in dealing with its contents.
