Taxpayer Approval for Notice

There are situations where no approval is required for issuing a third party notice. In other cases, however, HMRC must obtain either:-

  • the agreement of the person whose tax position they are checking, or
  • the approval of the Tribunal.


HMRC’s preferred option is to obtain the taxpayer’s agreement, particularly where the relationship between the taxpayer and the third party is close, as in the case of a sole director of a close company. They will not use this option however if, to defend any appeal against a taxpayer-approved third party notice, they might have to reveal information in front of the third party that they would wish to keep from them. In that case, they will proceed by way of a Tribunal-approved notice.

When seeking the taxpayer’s approval, HMRC will:-

  • explain the reasons why they need the information and documents and provide a copy of the proposed notice
  • make it clear that if the taxpayer does not give their approval they will seek the approval of the Tribunal
  • ask the taxpayer for any representations they might wish to make.


The notice sent to the third party must be in exactly the same form as the notice approved by the taxpayer.

When explaining the reasons for wanting the information and documents HMRC will usually give details of the liability being investigated and explain why the documents or information are needed. This allows the taxpayer to make proper representations after giving the matter due consideration.

If the taxpayer refuses to approve the notice, HMRC will try in the first instance to obtain the information informally from the third party. If this is not successful they will seek approval from the Tribunal.

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