HMRC Civil Information Powers

HMRC will usually request information on an informal basis before issuing statutory information notices (but are not obliged to do so).  In those circumstances, the recipient is under no legal obligation to comply until a formal information notice is issued.  However, informal requests can sometimes provide an opportunity to engage with HMRC in order to narrow down the scope of any subsequent formal notice.

Once a formal information notice has been issued, failure to provide information or to carelessly/deliberately provide incorrect information can give rise to financial penalties (subject to any available legal challenges – see below). 

The key for any taxpayer under investigation will be to strike the right balance between protecting themselves and being seen to cooperate with HMRC.  Our specialists can help clients respond effectively to investigations and challenge HMRC where appropriate.

The main legislation governing HMRC’s information powers specifically restricts the type of information or documents that HMRC can ask for.  The key restriction is that the information or documents requested must be ‘reasonably required’ for the purpose of checking the relevant taxpayer’s tax position.  What is considered reasonable will vary depending on the circumstances of each case.

There are also restrictions (amongst others) applying to any information or documents covered by legal privilege, documents not treated as being in the ‘possession or power’ of the notice recipient, and potentially also to stop certain types of notices being issued to non-UK persons.  

Our specialists are experts on these restrictions, which relate to complex and constantly evolving areas of law.  If you receive a request for information (formal or otherwise), please contact a member of our team for advice as soon as possible.

Whether there is a right of appeal against an information notice will depend on the type of notice issued:

• For taxpayer notices (i.e., where the notice is issued directly to the taxpayer), the taxpayer can appeal against the information notice unless it has already been approved in advance by the tax tribunal or the information requested forms part of the taxpayer’s statutory records.
• Other types of notices (i.e., those issued to third parties) generally require approval from the tax tribunal, meaning that there is either no right of appeal against the information notice or (in some circumstances) very limited grounds under which an appeal could be made.  In contrast, the new ‘financial institution notices’ introduced from June 2021 do not require any approval from the tax tribunal but still cannot be appealed under any circumstances.

Where there is no obvious right of appeal against an information notice and other attempts to engage with HMRC have failed, our specialists can advise on other potential methods of challenge (including, where appropriate, judicial review and penalty appeals).