HMRC have opened a consultation: 'Amending HMRC’s Civil Information Powers' explores the efficiencies of HMRC’s civil information powers and considers possible improvements to make things easier for HMRC to obtain certain types of information and to charge higher penalties for non compliance.

Schedule 36 of Finance Act 2008 gives HMRC the power to make a written request ("an information notice") for a taxpayer to provide information or produce a document provided that the information or document is "reasonably required" by the officer for the purpose of checking the taxpayer's tax position. 

  • An information notice can be used to allow the checking of past, present and future tax liabilities out of a check, investigation or enquiry of any kind. 
  • The notice must be in writing and specify the period for the information or document to be provided and by what means and or form.

There are restrictions as to the use of this power and a taxpayer may appeal such a notice. See Schedule 36 Notices, subscriber guide.

No changes are planned in the consultation for :

  • Powers to inspect premises or other property
  • Restrictions on what information can be requested
  • Changes to Bulk Data collection (sch 23 FA 2011)

Proposals include:

Third party notice proposals

  • The removal of the requirement to seek approval from the tribunal or the taxpayer before a third party notice could be issued

Question 1: Do you have any views on the suggested change to align third party notices with taxpayer notices?

Question 2: Do you think any further internal processes, or safeguards, prior to issuing the notice, would be required?

Question 3: Should there be any further restrictions on the type of information that could be requested under this notice?

Financial information notice proposals

  • Banking information would be defined to include bank statements, information about transactions on the account and information held about the legal and beneficial ownership of the account (e.g. Know Your Customer information)
  • There would be no need to get tribunal approval for the issue of such a notice, nor there a right of appeal

Question 4: Do you think there should be a separate rule for third party notices for banking information?

Question 5: Should this power be subject to any restrictions or safeguards? If so, please state the restrictions or safeguards.

Question 6: Do you have any other ideas for options that could deliver both the objective of speeding up the process and providing appropriate safeguards?

Obtaining Information for Other Functions of HMRC

  • To allow HMRC to access information that was reasonably required for all its tax functions, including the collection of tax debt.

Question 7: What are your views on extending information powers in this way?

Schedule 36 Penalties

  • Under current wording tribunals do not impose penalties; instead they grant permission for HMRC to assess penalties.
  • HMRC seeks permission from the tribunal to assess increased daily penalties. If the tribunal agrees HMRC would then notify the person that, from the date specified by the tribunal, they would be liable for an increased daily penalty of the amount determined by the tribunal. HMRC would then assess the increased penalty against the person in the same way it assesses any other penalty under Schedule 36.
  • HMRC would like to explore harmonising the penalty regime across Schedule 36 by extending the scope of increased daily penalties to cover all of the notices contained in Schedule 36

Question 8: Do you have any views on amending the legislation in this way?

Question 9: Should the increased daily penalties apply to all Schedule 36 information notices?

Third Party Notices – The Requirement to Notify the Taxpayer

  • There is currently nothing to prevent a third party from notifying the taxpayer about the notice. The proposal is to put an obligation on the third party not to inform the taxpayer about the notice where the tribunal has disapplied the requirement to send a summary to the taxpayer under paragraph 3(3)(e) and (4) of Schedule 36.

Question 10: Do you have any views on making amendments to prevent the third party from notifying the taxpayer in this way?

Question 11: What form of sanction should be imposed on the third party for a breach of this rule?

Useful guides

Schedule 36 Notices

External Links

HMRC Amending HMRC’s Civil Information Powers