HMRC can use their powers under Finance Act 2008, Sch. 36 to issue a formal notice to a taxpayer (a taxpayer notice) requiring them to provide information and documents reasonably required to check their tax position. These will usually be requested informally in the first instance but a formal notice will be issued if the taxpayer:-
Where HMRC suspects tax avoidance, they are likely to issue a formal notice at the outset without making an informal request for the information and documents.
If the taxpayer needs more time to provide the information than that specified by the informal request they should immediately, or as soon as this is realised contact the officer to agree a realistic timescale. Delay in contacting the officer will lead to complications and possibly the imposition of a penalty for delay. It should be noted, however, that if the officer does not consider that there is a good reason for requesting extra time a formal notice will be issued as soon as the time-limit in the informal request has expired.
The notice can ask only for information and documents reasonably required for checking the taxpayer’s tax position. There is a right of appeal against a notice requiring the production of supplementary information and documents (but not against the requirement to produce statutory records) if the taxpayer does not agree that they are reasonably required. But it should be kept in mind that reasonably required is not the same as definitely required.
Supplementary information could include such things as:-