Third Party Notices

Under FA 2008, Sch. 36, para.2 a written notice can be sent to a person requiring them to:-

Provide information or
Produce a document

if the information or document is reasonably required for the purpose of checking the tax position of another person – a third party notice.

HMRC will only issue a third party notice if they cannot get the information or documents by way of a taxpayer notice or if they suspect that there might be collusion between the taxpayer and the third party.

There is a time-limit for issuing a third party notice in respect of a taxpayer who has died. Para. 22 stipulates that a notice for checking the tax position of a dead person cannot be issued more than 4 years after the person’s death.

The third party notice must name the person whose tax position is being checked unless the notice was approved by the Tribunal and they were satisfied that it should not do so.

A copy of the notice must be sent to the taxpayer unless this condition is disapplied by the Tribunal.

To take the stress of an HMRC tax investigation away call KinsellaTax on 0800 471 4546

Appeals

The person to whom a third party is issued with the agreement of a named taxpayer can appeal against the notice or any requirement in it. The only grounds of appeal are that complying with the notice would be unreasonably burdensome (Finance Act 2008, Sch. 36, para. 30).

There is no right of appeal, however, against:-

A requirement to provide information or produce a document that forms part of the taxpayer’s statutory records

A notice issued with the approval of the Tribunal

A notice requiring only information or documents that form part of the taxpayer’s statutory records and relate to:-

The supply of goods or services

Acquisitions of goods from another member state

Importation of goods from outside the member states in the course of carrying on a business.

See FA 2008, Sch. 36, para. 29 (2) and (3) and para. 34.

For more information on how to appeal against a notice from HMRC, call KinsellaTax on 0800 471 4546

Disapplying Conditions

Para. 3 (4) permits the Tribunal to disapply conditions (3) to (6) if they are satisfied that telling the taxpayer that the information or documents are required and giving them a reasonable opportunity to make representations would prejudice the assessment or collection of tax.

Para. 3 (5) permits the Tribunal to disapply the requirement to name the taxpayer in the notice if they are satisfied that the officer has reasonable grounds for believing that naming the taxpayer would seriously prejudice the assessment or collection of tax.

HMRC have indicated that they would consider that it would prejudice the assessment or collection of tax where they believe there is a risk of:-

Collusion with or intimidation of a third party

The person’s flight or disappearance

The alienation of assets

Destruction of evidence

HMRC would consider that there was a serious risk of prejudice to the collection or assessment of tax if there was a risk of:-

Tipping of a person suspected of committing a serious civil offence

The loss of significant amounts of tax

Under FA 2008, Sch. 36, para. 34 (2), no approval is needed to issue a third party notice requiring only information or documents that form part of the taxpayer’s statutory records and relate to:-

The supply of goods or services

Acquisitions of goods from another member state

Importation of goods from outside the member states in the course of carrying on a business

For more information on how KinsellaTax can help you, call us FREE on 0800 471 4546

Groups

There are special rules, contained in Finance Act 2008, Sch. 36, para. 35 for issuing third party notices for checking the tax position of parent and subsidiary undertakings. These terms are defined in Companies Act 2006 s. 1161 and 1162 and Sch. 7 as follows:-

An ‘undertaking’ is a body corporate, a partnership or unincorporated association carrying on a trade or business, with or without a view to profit.

An undertaking is a ‘parent undertaking’ of a subsidiary undertaking if any of the following apply:-

It holds a majority of the voting rights

It is a member of the other undertaking and has the right to appoint or remove a majority of its board of directors

It is a member of the undertaking and controls alone, or under agreement with other shareholders or members, a majority of the voting rights in the undertaking.

It has the power to exercise, or actually exercises, dominant influence or control over the other undertaking

It and the other undertaking are managed on a unified basis

It has the right to exercise a dominant influence over the undertaking:-

Through provisions in the undertaking’s articles or

Through a control contract

A ‘subsidiary undertaking’ of a parent undertaking includes subsidiaries of the parent undertaking’s subsidiaries, and so on.

The special rules deal with the situations where a third party notice is issued to:-

Any person to check the tax position of the parent undertaking and any of its subsidiary undertakings.

The parent undertaking to check the tax position of one or more of its subsidiaries.

There are no special rules governing the issue of a third party notice to a subsidiary undertaking to check the tax position of the parent undertaking or another subsidiary undertaking. The normal third party notice rules apply to these notices.

Worried about your HMRC tax investigation? Call KinsellaTax NOW to take the stress away on 0800 471 4546

Partnerships

There are special rules in FA 2008, Sch. 36, para. 34 which apply to notices issued for the purpose of checking the partnership tax position of one or more partners. The rules depend on whether the notice is:-

To someone who is not a partner to check the tax position of more than one partner.

To a partner to check the tax position of at least one other partner.

For expert advice call KinsellaTax on 0800 471 4546

Approval

The conditions that have to be met before the Tribunal can give its approval for a third party notice are set out in FA 2008, Sch. 36, para. 3 and 4 and are as follows:-

The application is made by or with the agreement of an authorised officer

The Tribunal is satisfied that, in the circumstances, the officer is justified in issuing the notice

The person to whom the notice is addressed has been told that the information or documents referred to in the notice are required and given a reasonable opportunity to make representations to the officer (unless this condition is disapplied by the Tribunal)

The Tribunal has been given a summary of any representations made by the person (unless this condition is disapplied by the Tribunal)

The person whose tax position you are checking has been given a summary of the reasons why the information or documents from the third party are required (unless this condition is disapplied by the Tribunal

The notice names the person whose tax position is being checked.

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Third Party Notices