Information requests

During enquiries of any nature it is common for HMRC to ask for documents and information. Such requests are usually made under powers in Schedule 36 FA 2008 which grants HMRC considerable powers to obtain data from the taxpayer or third parties. Schedule 36 has also widened in scope in recent years, for example with the addition of Financial Institution Notices enabling HMRC to approach third party banks for data relating to their clients with little or no oversight. 

While widely drawn, Schedule 36 also includes restrictions and safeguards for the taxpayer but, despite this, it is not uncommon for HMRC to demand data that is outside the scope of its powers. We continue to see examples of this regularly, for example data relating to transactions undertaken in earlier tax years not under self-assessment enquiry, or data that has nothing to do with the tax return in question such as how capital assets were funded many years previously. These are not relevant to the enquiry which should only focus on the specific tax return in question. 

It is possible for HMRC to use Schedule 36 outside a self-assessment enquiry, for example in a ‘discovery’ context but, again, this is not an unfettered power. HMRC must have a genuine reason to suspect that tax in past years has been under-declared before a valid information notice can be issued; seeking data in the hope that something is discovered is not permitted. 

There is also an overriding safeguard in that anything requested must be ‘reasonably required’ for the purpose of checking the tax position so it is possible to resist demands despite for documents that cannot affect the tax position, for example documents that originated from prior years that can no longer be assessed because of the passage of time. Similarly, requests for lists such as a list of bank accounts operated, a list of properties owned or a list of shares held might be resisted if, for example, items on the list are not income producing such as a current account or a holiday home hence are of no relevance to the tax return under enquiry.

Finally, it should be remembered that an appeal can be made not only against a demand for inappropriate data within an information notice but also against the validity of the notice itself if the relevant conditions are not met, for example ‘Condition A’ (no valid open enquiry) or ‘Condition B’ (no genuine discovery position).