The information powers in Finance Act 2008, Sch. 36 give HMRC the right to request information that is reasonably required for checking a person’s tax position. They will normally request this information informally in the first instance but if it is not provided they will issue a formal notice to the taxpayer (a taxpayer notice) requiring its production.
When making an informal request for the information, officers are instructed that they should explain why they think the information is reasonably required to check the person’s tax position.
If the taxpayer refuses to comply with an informal request or does not supply all information by the specified date, HMRC will issue a formal taxpayer notice for the information. A formal notice can include a demand to provide both:-
- the statutory records – against which there is no appeal
- supplementary information and documents – against which the taxpayer can appeal.
HMRC can also request information from a third party by way of formal notice and they can also issue an ‘identity unknown’ notice to check the tax position of a person, or persons, whose identity is not known. Permission is required from the Tribunal to issue some notices.
Some documents are covered by legal privilege and cannot be required either informally or by a formal notice. If there is any dispute about whether a document is covered by legal privilege the matter will be referred to the Tribunal for their decision. It is open to the taxpayer to permit HMRC to see legally privileged documents if it is thought that this will be helpful in resolving the officer’s concerns.