Finance Act 2008, Sch. 36 gives HMRC the power to obtain information or a document from third parties that are reasonably required for checking the tax position of another person whose identity is known to HMRC. This is known as a third party notice.
An officer should not issue a third party notice unless there is no other way of obtaining the information or documents. They will first of all try to obtain it from the taxpayer themselves. They will not agree to use a third party notice to save the taxpayer the trouble or expense of obtaining the information or documents themselves.
Unless there is considered to be the danger of collusion, the third party should normally be given the opportunity to provide the information and documents informally, without the issue of a third party notice. If the third party is not prepared to comply with an informal request, the officer will ask the third party to comment on the burden of providing the information and documents and balance this against the need for it to check the taxpayer’s tax position. It is particularly important that the third party gives this careful consideration since, apart from a requirement to produce statutory records (against which there is no appeal), they can appeal the notice on the grounds that compliance with it would be unduly onerous.