Under FA 2008, Sch. 36, para.2 a written notice can be sent to a person requiring them to:-
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.
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:-
See FA 2008, Sch. 36, para. 29 (2) and (3) and para. 34.
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:-
HMRC would consider that there was a serious risk of prejudice to the collection or assessment of tax if there was a risk of:-
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:-
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:-
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:-
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.
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:-
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:-