HMRC information notices — what you need to know

No. An information notice should only seek information and/or documents that are relevant to a current tax enquiry. 

There are limitations to what HMRC can legitimately request, including:

• Material relating to an ongoing appeal to the Tribunal. HMRC must seek any such material through the appeal process.
• Privileged material. This can cover legal advice that you’ve sought and/or that has been provided by a lawyer, as well as material relating to ongoing litigation. This is a very nuanced area and legal advice should be taken where this issue may arise.
• Personal records (such as medical or journalistic records). However, requests for information or documentation relating to a taxpayer’s income can be requested. As such, it’s advisable (where possible) to keep personal and business transactions or accounts separate. 
• Requests by HMRC for a person to create a document that doesn’t already exist. However, a recipient of an information notice can create a document that contains information sought if that’s a convenient way for them to produce that information. If a taxpayer has failed to keep documents that they’re required to under tax legislation, HMRC can compel the provision of information that should have been in those documents, had they existed. 
• Documents that are the property of an auditor and that were created in the course of conducting a statutory audit.
• Documents that are the property of a tax adviser and which consist of ‘relevant communications’ with the taxpayer client or another tax adviser to that client for the purpose of giving or seeking advice on that client’s tax affairs. This is subject to two exceptions (though the documents may still be protected if the below can be ascertained from other documents already provided to HMRC):
  • Any part of any document that contains workings or analytical information demonstrating how an entry on a client’s tax return, accounts or other document has been calculated, where the tax adviser has assisted the client in that exercise. 
  • Any part of a document that contains information concerning the identity or address of a taxpayer or other person that has acted on behalf of that taxpayer where an IUN or INFKN has been issued.
• A document where the whole of it originated more than six years before the information notice was issued (unless given by or agreed by an authorised officer).

‘Documents’ can include:

• Any type of correspondence. 
• Any type of storage device from which data can be collected or reproduced. 
• Any type of device from which an image can be collected or reproduced. 
• Drawings, plans, graphs, etc. 

A taxpayer’s tax position can include:

• Any past, present and/or future liabilities to any tax.
• Penalties or any other sums owing that relate to tax. 
• Any claims, applications and/or notices concerning a liability to tax. 
• Deductions and/or repayments of tax that are required to be made under PAYE regulations, the Construction Industry Scheme or any other repayments required under any other provision of tax legislation. 

It’s possible to provide HMRC with copies instead of original documents. However, the original documents will need to be made available for inspection by HMRC if requested — otherwise, it’ll be deemed a failure to comply with the information notice. 

HMRC is also permitted to access the computers of a recipient of an information notice that were used in connection with the documents sought. It also has the power to compel assistance from the recipient with the computers. 

There has to be a ‘rational connection’ between the information or documentation sought and the investigation being pursued.

The Tax Tribunal has previously held that information or documentation can’t be ‘reasonably required’ where it relates to tax periods for which HMRC is out of time to raise an assessment (subject to certain exceptions, such as evidence of dishonest conduct). 

In a challenge against an information notice, the Tax Tribunal has largely decided in previous cases that HMRC will have responsibility for proving that the information or documentation sought is ‘reasonably required’. 

An information notice can only require the recipient to provide HMRC with requested documentation where it’s in their possession or power. 

‘Possession’ means:

• Actual physical possession of the documentation.
• The right to actual physical possession of the documentation where the recipient doesn’t already have it. 
• Ownership of the documentation.
• Lawful possession of the documentation.

‘Power’ has been held by the Tax Tribunal to cover circumstances where the recipient of an information notice would have been provided with the requested documentation if they sought it from the person in possession of it and the recipient of the information notice hadn’t been able to demonstrate that a request for provision by the person in possession of the documentation would have been refused. 

As such, where HMRC requests documentation that the recipient of an information notice doesn’t possess but does know who may possess it, they should consider making a request of that person for it to be provided to them to comply with the notice. 

The requirement for the recipient of an information notice to only produce documents within its possession or power doesn’t apply to information.

In most circumstances, yes. You can contact the HMRC Officer who has issued the taxpayer notice and explain why you’re unable or unwilling to comply with this. For example, this may be because the notice requests documentation that you no longer have. 

Alternatively, you may also be able to appeal to the Tax Tribunal. However, you can’t do so if it pre-approved the notice — in that case, you may need to pursue a judicial review. If you’re to appeal, the Tax Tribunal would ordinarily expect there to have been some discussion on the point with HMRC in the first instance. If you do choose to appeal to the Tax Tribunal, you’ll have 30 days from the date of the notice to do this.

Yes, these can be appealed to the Tax Tribunal, though only on the basis that it would be overly onerous to comply. 

Once the Tax Tribunal has considered your reasons for challenging an information notice and HMRC’s reasons for seeking the material listed within the notice, it can choose to:

• Confirm the information notice — meaning that you’d be required to provide the information or documentation sought within the notice.
• Vary the information notice — meaning that you’d be required to provide information or documentation ordered by the Tax Tribunal.
• Set aside the notice — meaning that you don’t have to provide the information or documentation requested within the notice. HMRC must also then return to you any information or documentation already provided, together with any copies it has made. HMRC will be unable to rely on that information or documentation, though it isn’t required to destroy any work that has been conducted arising from the information or documentation obtained under the notice.

Yes, provided that:

1. It’s a tax owing to an EU Member State that’s covered by EU Council Directive 2011/16/EU on administrative cooperation in the field of taxation.
2. It’s a tax imposed by a country that the UK has a double tax treaty with which contains a provision for the exchange of information or that the UK has a tax information exchange agreement with.
3. It provides for the collection of a tax or duty that’s covered by the Mutual Assistance Directive (2010/24/EU) (as it applied before 31 December 2020).

Where you have any such concerns, you should always seek independent legal advice to ensure that you understand your legal position. 

Generally speaking, a person has the right not to self-incriminate. However, the Tax Tribunal has previously decided that the privilege against self-incrimination doesn’t prevent a taxpayer or other party from complying with an information notice. The right not to self-incriminate would only be breached where the evidence was subsequently used in a criminal prosecution, with the criminal court concerned being responsible for deciding whether that evidence would be admissible in those proceedings. 

You’ll be liable for an initial penalty and — if the non-compliance continues thereafter — a daily default penalty can be imposed. It’ll be for HMRC to prove that the recipient of an information notice has failed to comply. No penalty can be imposed where there’s a reasonable excuse for not having complied. If a penalty is imposed, HMRC’s decision to impose it and/or the amount of the penalty imposed can be appealed to the Tax Tribunal. 

In serious cases of non-compliance, HMRC can also apply to the Upper Tribunal for a tax-geared penalty to be imposed. To do so, there must be a causal link between the non-compliance and the loss of tax (whether actual or prospective). When deciding whether to impose such a penalty, the Upper Tribunal will consider any reasons for non-compliance, whether the non-compliance has been remedied to any extent, the duration and severity of the non-compliance, any aggravating or mitigating factors, the possibility for HMRC to recover the tax at risk and the public interest and circumstances of the taxpayer in issuing such a penalty. There’s no maximum limit to a tax-geared penalty, though the Upper Tribunal must take into account the value tax at risk. 

A penalty can also be imposed where the recipient of an information notice provides inaccurate information or documentation, where that inaccuracy is careless or deliberate, the recipient knew of the inaccuracy at the time of provision but didn’t inform HMRC or the recipient later becomes aware of the inaccuracy but doesn’t take reasonable steps to make HMRC aware.

It’s possible for a penalty to be appealed if imposed.