HMRC have wide powers to gather information and documents from individuals and businesses, and in some circumstances they will issue a formal HMRC Information Notice / HMRC Schedule 36 Notice. They might do this instead of making an informal request first, depending on the circumstances.
An HMRC Information Notice has a statutory process which must be followed, with regards to what information is allowed to be requested, the period it covers, how it is delivered/produced etc. Be sure to check and understand the qualifying criteria set out at HMRC Schedule 36 of the Finance Act 2008.
When an HMRC information notice is received it is important to ensure that it has been validly issued, and that the request is reasonable and not unduly onerous. Where HMRC request information, they should have regard to the requirements and considerations as set out in their own guidelines and instructions as well as the requirements of the tax / HMRC Schedule 36 legislation.
We have extensive experience in dealing with an information notices, having worked with clients and HMRC on the finer details, materiality and usefulness of these. We take control and manage the process to minimise the interruptions that any form of tax investigation causes to a client’s life and business and ensure that their interests are best protected.
If you receive an HMRC information notice, it is important that it is not ignored and that you seek specialist advice as (if it is validly issued) you are legally required to provide the documents/information requested therein, or potentially suffer financial penalties.
If you fail to comply with a Schedule 36 notice within the time-limit specified or agreed then you may have to pay an initial £300 penalty. If non-compliance continues, additional penalties of up to £60 per day can be levied. Alternatively, HMRC can apply to an independent tax tribunal to levy a higher penalty based on the amount of tax due.
Similarly, if the request made in the HMRC information notice is considered unreasonable or not relevant then you can appeal to an independent tax tribunal. Proper representation of the case at a tribunal maximises the chances of success, but trying to do this whilst also running a business/practice is difficult. Specialist advice is vital for a successful challenge and managing HMRC.
Exceptionally, HMRC can approach ‘third parties’ too for documents and/or information without your knowledge or consent. To do so, HMRC must first apply to an independent tax tribunal for approval or get your permission. You might not be informed of HMRC’s application and, therefore, will not in those circumstances be able to ask the tribunal to refuse the HMRC information notice application based on any representations we could have made.
HMRC Information Notice / HMRC Schedule 36
If this happens, please get in touch as it is likely that HMRC considered that you would not have co-operated had they contacted you directly, or that they are building a case to investigate under one of their more intrusive Codes of Practice or, more seriously, building a case to criminally investigate. Either way, it is important to take control of the situation to ensure that your interests are best protected.
See here, HMRC’s Compliance Handbook, for more about the specific types of HMRC Information Notice likely to be encountered in enquiries and investigations.
HOW CAN PURE TAX HELP?
At Pure Tax our Tax Investigation & Disclosure specialists are industry recognised and have dealt with hundreds of contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the investigation and disclosure processes run smoothly and that your interests are best protected.
