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Power to obtain information and documents from third party

"(1)     An officer of Revenue and Customs may by notice in writing require a person—

(a)     to provide information, or

(b)     to produce a document,

if the information or document is reasonably required by the officer for the purpose of checking the tax position of another person whose identity is known to the officer (“the taxpayer”) or for the purpose of collecting a tax debt of the taxapyer.

[...]

(3)     In this Schedule, “third party notice” means a notice under this paragraph." (FA 2008, Sch 36, para 2)

Power to obtain information and documents from third party

Form of notice

 

See I-3: Taxpayer notices

Form of notice

Notice must name taxpayer​

"(2)     A third party notice must name the taxpayer to whom it relates, unless the tribunal has approved the giving of the notice and disapplied this requirement under paragraph 3." (FA 2008, Sch 36, para 2(2))

HMRC decide who taxpayer is

 

“It was for HMRC to decide who should be regarded as the taxpayer for the purposes of the third party notices served pursuant to schedule 36, that is to say the person for the checking of whose tax affairs the documents and information are required. The mere fact that the documents and information relating to non-taxpayer entities are also relevant to their tax affairs does not mean that they too were taxpayers within paragraphs 2 and 3 of schedule 36.” (R (oao Derrin) v. HMRC [2016] EWCA Civ 15, §99, Sir Terence Etherton)
 

Groups

Notice to any person checking parent and subsidiary: name parent

"(1)     This paragraph applies where an undertaking is a parent undertaking in relation to another undertaking (a subsidiary undertaking).

(2)     Where a third party notice is given to any person for the purpose of checking the tax position of the parent undertaking and any of its subsidiary undertakings,—

(a)     paragraph 2(2) only requires the notice to state this and name the parent undertaking, and

(b)     the references in paragraph 3(5) to naming the taxpayer are to making that statement and naming the parent undertaking" (FA 2008, Sch 36, para 35(1), (2))

Notice to parent checking more than one subsidiary: no requirement to name subsidiaries

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

(a)     paragraph 2(2) only requires the notice to state this, and

(b)     the references in paragraph 3(5) to naming the taxpayer are to making that statement." (FA 2008, Sch 36, para 35(4))

Partnerships

"Where a third party notice is given for the purpose of checking the tax position of more than one of the partners (in their capacity as such),

(a)   paragraph 2(2), and

(b)   the references in paragraph 3(5) to naming the taxpayer are to making that statement and naming the partnership

only requires the notice to state this and give a name in which the partnership is registered for any purpose." (FA 2008, Sch 36, para 37(3))

Unless disapplied by tribunal

"(5)     Where the tribunal approves the giving of a third party notice under this paragraph, it may also disapply the requirement to name the taxpayer in the notice if it is satisfied that the officer has reasonable grounds for believing that naming the taxpayer might seriously prejudice the assessment or collection of tax." (FA 2008, Sch 36, para 3(5))

Reasonably required for the purpose of checking the tax position

See I-3: Taxpayer notices

Notice must name taxpayer​
Reasonably required for the purpose of checking the tax position

Purpose of collecting tax debt

 

See I-3: Taxpayer notices

Purpose of collecting tax debt​

Taxpayer agreement or FTT approval required​

 

“(1) An officer of Revenue and Customs may not give a third party notice without-
(a) the agreement of the taxpayer, or
(b) the approval of the tribunal.

 

(2)     An officer of Revenue and Customs may ask for the approval of the tribunal to the giving of any taxpayer notice or third party notice (and for the effect of obtaining such approval see paragraphs 29, 30 and 53 (appeals against notices and offence)).” (FA 2008, Sch 36, para 3(1) - (2)).

 

“Article 8 requires the existence of adequate and effective safeguards against abuse of the measure.  As discussed above, mere statutory authority for actions that impinge upon the rights protected by Article 8 is insufficient; there must be sufficient procedural safeguards in place (such as external judicial control) to ensure that the interference is adequately supervised.  Although in Munby J found in R (oao Cooke) v Revenue and Customs Commissioners that the need for judicial scrutiny was adequately met by the availability of judicial review, his decision was subject to important qualifications.  In particular, absent prior judicial approval of the notice by a General or Special Commissioner, for judicial review to be an effective remedy, there has to be proper scope of an appropriate degree of judicial examination.  We find that this must mean that the person whose Article 8 rights are in question must be made aware of the information notice, so that he can bring judicial review proceedings.  If that person is unaware of the notice, judicial review is not an effective remedy, as it cannot be effectively exercised.” (PML Accounting Ltd v. HMRC [2015] UKFTT 440 (TC), §167).

 

Taxpayer agreement does not mean agreement that information reasonably required to check tax position


“The Applicants have never conceded that the information required by the TPNs is reasonably required, but they recognise that their ability to appeal those notices is limited. The fact that they prefer to challenge the notices on the grounds available at a full hearing rather than simply making representations and taking their chances on an unappealable Tribunal decision is understandable. To have that opportunity to challenge, they needed to consent to the issue of the notices. Although they stood by their consent, it was always under sufferance and cannot, in my view, be regarded as an implicit admission that the information is reasonably required.” (South Eastern Power Networks Plc v. HMRC [2017] UKFTT 494 (TC), §159, Judge McKeever).

Groups

"(7)     In this paragraph “parent undertaking”, “subsidiary undertaking” and “undertaking” have the same meaning as in the Companies Acts (see sections 1161 and 1162 of, and Schedule 7 to, the Companies Act 2006" (FA 2008, Sch 36, para 35(7)).

Notice to any person checking parent and subsidiary: parent is taxpayer

(2)     Where a third party notice is given to any person for the purpose of checking the tax position of the parent undertaking and any of its subsidiary undertakings, —

[...]

(3)     In relation to such a notice—

(a)     in paragraphs 3 and 4 (approval etc of notices and copying third party notices to taxpayer), the references to the taxpayer have effect as if they were references to the parent undertaking" (FA 2008, Sch 36, para 35(2), (3)(a)).

Notice to parent checking more than one subsidiary: no need for approval or opportunity for representations

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

[...]

(4A)     In relation to such a notice—

(a)     in paragraph 3 (approval etc of notices), sub-paragraphs (1) and (3)(e) do not apply," (FA 2008, Sch 36, para 35(4), (4A)(a)).

Partnership

"(3)  Where a third party notice is given for the purpose of checking the tax position of more than one of the partners (in their capacity as such)...

(4)  In relation to such a notice given to a person other than one of the partners —

(a)  in paragraphs 3 and 4 (approval etc of notices and copying third party notices to taxpayer), the references to the taxpayer have effect as if they were references to at least one of the partners," (FA 2008, Sch 36, para 37(3), (4)(a)).

Notice to one partner for the purpose of checking other partners: no need for approval or opportunity for representations

"(5)     In relation to a third party notice given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such)—

(a)     in paragraph 3 (approval etc of notices), sub-paragraphs (1) and (3)(e) do not apply," ​(FA 2008, Sch 36, para 37(5)).

Exception: statutory records relating to supply of goods or services etc

"(1)     This paragraph applies to a taxpayer notice or third party notice that refers only to information or documents that form part of any person's statutory records and relate to—

(a)     the supply of goods or services,

(b)     the acquisition of goods from another member State, or

(c)     the importation of goods from a place outside the member States in the course of carrying on a business.

(2)     Paragraph 3(1) (requirement for consent to, or approval of, third party notice) does not apply to such a notice." (FA 2008, Sch 36, para 34(1) - (2)).

Exception: pensions matters

"(1)     This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.

 

(3)     In relation to such a third party notice—

(a)     paragraph 3(1) (approval etc of third party notices) does not apply,

(b)     paragraph 4(1) (copying third party notices to taxpayer) does not apply, and

(c)     paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds." (FA 2008, Sch 36, para 34B(1), (3))

Meaning of pensions matters

"(2)     “Pensions matter” means any matter relating to—

(a)     a registered pension scheme,

(b)     an annuity purchased with sums or assets held for the purposes of a registered pension scheme or a pre-2006 pension scheme, 

(c)     an employer-financed retirement benefits scheme,

(d)     a QROPS or former QROPS, or

(e)     an annuity purchased with sums or assets held for the purposes of a QROPS or former QROPS." (FA 2008, Sch 36, para 34B(2))

Taxpayer agreement or FTT approval required​

Further conditions if notice is to parent to check subsidiaries

 

Apply restrictions on giving taxpayer notice where taxpayer has made a return 

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

[...]

(4A)     In relation to such a notice—

[...]

(c)     paragraphs 21 and 21A (restrictions on giving taxpayer notice where taxpayer has made return) apply as if the notice was a taxpayer notice or taxpayer notices given to each subsidiary undertaking (or, if the notice names the subsidiary undertakings to which it relates, to each of those undertakings)," (FA 2008, Sch 36, para 35(4), (4A)(c))

See I-3: Taxpayer notices 

Conditions for FTT approval and conduct of approval hearing

 

See I-3: Taxpayer notices 

FTT approval decision final

 

See I-3: Taxpayer notices 

Conditions for FTT approval and conduct of approval hearing
FTT approval decision final

Copy of notice to be given to taxpayer (unless disapplied)

 

"(1)     An officer of Revenue and Customs who gives a third party notice must give a copy of the notice to the taxpayer to whom it relates, unless the tribunal has disapplied this requirement.

(2)     The tribunal may not disapply that requirement unless—

(a)     an application for approval is made by, or with the agreement of, an authorised officer of Revenue and Customs, and

(b)     the tribunal is satisfied that the officer has reasonable grounds for believing that giving a copy of the notice to the taxpayer might prejudice the assessment or collection of tax." (FA 2008, Sch 36, para 4)

Non-existence of taxpayer not sufficient to disapply requirement

“Paragraph 4(2) does not ask what might happen if a copy of the notice is not given to the taxpayer. Put another way, HMRC were not saying that giving a copy of the notice to the Company might prejudice the assessment or collection of tax. Rather, they were saying that it was simply not possible to give a copy of the notice to the Company (since, by the time of the hearing, the Company no longer existed).” (A Taxpayer v. HMRC [2018] UKFTT 65 (TC), §11, Judge Jonathan Richards).
 

Groups 

"(7)     In this paragraph “parent undertaking”, “subsidiary undertaking” and “undertaking” have the same meaning as in the Companies Acts (see sections 1161 and 1162 of, and Schedule 7 to, the Companies Act 2006" (FA 2008, Sch 36, para 35(7)).

Copy to parent if checking parent and subsidiary


(2)     Where a third party notice is given to any person for the purpose of checking the tax position of the parent undertaking and any of its subsidiary undertakings, —

[...]

(3)     In relation to such a notice—

(a)     in paragraphs 3 and 4 (approval etc of notices and copying third party notices to taxpayer), the references to the taxpayer have effect as if they were references to the parent undertaking" (FA 2008, Sch 36, para 35(2), (3)(a)).

No copy necessary if notice to parent and checking subsidiaries

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

[...]

(4A)     In relation to such a notice—

[...]

(b)     paragraph 4(1) (copying third party notices to taxpayer) does not apply," (FA 2008, Sch 36, para 35(4), (4A)(b)).

Partnership

"(3)  Where a third party notice is given for the purpose of checking the tax position of more than one of the partners (in their capacity as such)...

(4)  In relation to such a notice given to a person other than one of the partners —

(a)  in paragraphs 3 and 4 (approval etc of notices and copying third party notices to taxpayer), the references to the taxpayer have effect as if they were references to at least one of the partners," (FA 2008, Sch 36, para 37(3), (4)(a)).

"(5)     In relation to a third party notice given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such)—

[...]

(b)     paragraph 4(1) (copying third party notices to taxpayer) does not apply," ​(FA 2008, Sch 36, para 37(5)).

Exception: pensions matters

"(1)     This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.

 

(3)     In relation to such a third party notice—

[...]

(b)     paragraph 4(1) (copying third party notices to taxpayer) does not apply" (FA 2008, Sch 36, para 34B(1), (3))

Meaning of pensions matters

See above.

Copy of notice to be given to taxpayer (unless disapplied)

Providing a copy of the notice to others

Pensions matters

"(1)     This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.

(2)     “Pensions matter” means any matter relating to—

(a)     a registered pension scheme,

(b)     an annuity purchased with sums or assets held for the purposes of a registered pension scheme or a pre-2006 pension scheme,

(c)     an employer-financed retirement benefits scheme,

(d)     a QROPS or former QROPS, or

(e)     an annuity purchased with sums or assets held for the purposes of a QROPS or former QROPS.

[...]

(6)     Where the notice relates to a matter within sub-paragraph (2)(a) or (b), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the scheme administrator in relation to the pension scheme.

(7)     Where the notice relates to a matter within sub-paragraph (2)(c), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the responsible person in relation to the employer-financed retirement benefits scheme.

(7A)     Where the notice relates to a matter within sub-paragraph (2)(d) or (e), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the scheme manager in relation to the pension scheme.

(8)     Sub-paragraphs (6) to (7A) do not apply if the notice is given to a person who, in relation to the scheme or annuity to which the notice relates, is a prescribed description of person." (FA 2008, Sch 36, para 34B(1), (2), (6) - (8))

Definitions

“employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act);

“pension scheme” has the same meaning as in Part 4 of FA 2004;

“pre-2006 pension scheme” means a scheme that, at or in respect of any time before 6 April 2006, was—

(a)     a retirement benefits scheme approved for the purposes of Chapter 1 of Part 14 of ICTA,

(b)     a former approved superannuation fund (as defined in paragraph 1(3) of Schedule 36 to FA 2004),

(c)     a relevant statutory scheme (as defined in section 611A of ICTA) or a pension scheme treated as if it were such a scheme, or

(d)     a personal pension scheme approved under Chapter 4 of Part 14 of ICTA;

“prescribed” means prescribed by regulations made by the Commissioners;

"QROPS” and “former QROPS” have the meanings given by section 169(8) of FA 2004;

“registered pension scheme” means a pension scheme that is or has been a registered pension scheme within the meaning of Part 4 of FA 2004 or in relation to which an application for registration under that Part of that Act has been made;

“responsible person”, in relation to an employer-financed retirement benefits scheme, has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 399A of that Act);

“scheme administrator”, in relation to a pension scheme, has the same meaning as in Part 4 of FA 2004 (see section 270 of that Act).

”scheme manager”, in relation to a pension scheme, has the meaning given by section 169(3) of FA 2004" (FA 2008, Sch 36, para 34C)

Providing a copy of the notice to others

Appealing notice

 

"(1)     Where a person is given a third party notice, the person may appeal against the notice or any requirement in the notice on the ground that it would be unduly onerous to comply with the notice or requirement." (FA 2008, Sch 36, para 30(1))

Procedure for appeal

See I-3: Taxpayer notices

Only ground of appeal is that notice is unduly onerous

 

“Paragraph 30 of schedule 36 provides: “Where a person is given a third party notice, the person may appeal . . . against the notice or any requirement in the notice on the ground that it would be unduly onerous to comply with the notice or requirement.”  So there is no right to challenge the contents of the notice…This contrasts with a taxpayer information notice, where the taxpayer may appeal  on any grounds against the issue of the notice or any of the requirements of the notice.” (South Eastern Power Networks Plc v. HMRC [2017] UKFTT 494 (TC), §§139 - 140, Judge McKeever).

Exception: pensions matters

"(1)     This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.

 

(3)     In relation to such a third party notice—

[...]

(c)     paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds." (FA 2008, Sch 36, para 34B(1), (3))

Meaning of pensions matters

See above.

Exception: notice to parent to check subsidiaries' tax position

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

[...]

(4A)     In relation to such a notice—

[...]

(d)     paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds" (FA 2008, Sch 36, para 35(4), (4A)(d))

Exception: notice given to partner

"(5)     In relation to a third party notice given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such)—

[...]

(c)     paragraph 30(1) (appeal) has effect as if it permitted an appeal on any grounds," ​(FA 2008, Sch 36, para 37(5)).

Taxpayer agreement to notice does not prevent third party appealing

 

“Paragraph 30(3) is also relevant in that it provides that there is no right of appeal  against a third party notice if the Tribunal has approved the giving of the notice. So the right of appeal applies only where the taxpayer has consented to the notice.” (South Eastern Power Networks Plc v. HMRC [2017] UKFTT 494 (TC), §141, Judge McKeever).

Exception: No appeal against requirement to produce taxpayer's statutory records

"(2)     Sub-paragraph (1) does not apply to a requirement in a third party notice to provide any information, or produce any document, that forms part of the taxpayer's statutory records." (FA 2008, Sch 36, para 30(2))

Groups: parent and subsidiaries are taxpayers when checking parent and/or subsidiary tax position


(2)     Where a third party notice is given to any person for the purpose of checking the tax position of the parent undertaking and any of its subsidiary undertakings, —

[...]

(3)     In relation to such a notice—

[...]

(b)     in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to the parent undertaking and each of its subsidiary undertakings." (FA 2008, Sch 36, para 35(2), (3)(a)).

"(4)     Where a third party notice is given to the parent undertaking for the purpose of checking the tax position of more than one subsidiary undertaking—

[...]

(4A)     In relation to such a notice—

[...]

(e)     in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to the parent undertaking or any of its subsidiary undertakings." (FA 2008, Sch 36, para 35(4), (4A)(e)).

"(7)     In this paragraph “parent undertaking”, “subsidiary undertaking” and “undertaking” have the same meaning as in the Companies Acts (see sections 1161 and 1162 of, and Schedule 7 to, the Companies Act 2006" (FA 2008, Sch 36, para 35(7)).

Partnerships: applies to statutory records of any partner

"(3)  Where a third party notice is given for the purpose of checking the tax position of more than one of the partners (in their capacity as such)...

(4)  In relation to such a notice given to a person other than one of the partners —

[...]

(b)     in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to any of the partners in the partnership" (FA 2008, Sch 36, para 37(3), (4)(b)).

"(5)     In relation to a third party notice given to one of the partners for the purpose of checking the tax position of one or more of the other partners (in their capacity as such)—

[...]

(d)     in paragraph 30(2) (no appeal in relation to taxpayer's statutory records), the reference to the taxpayer has effect as if it were a reference to any of the partners in the partnership." (FA 2008, Sch 36, para 37(5)).

Exception for pension matters: No appeal against requirement to produce part of any persons statutory records

"(1)     This paragraph applies to a third party notice or a notice under paragraph 5 if it refers only to information or documents that relate to any pensions matter.

(5)     A person may not appeal against a requirement in the notice to provide any information, or produce any document, that forms part of any person's statutory records." (FA 2008, Sch 36, para 34B(1), (5))

Exception: no appeal if notice was approved by Tribunal

(3)     Sub-paragraph (1) does not apply if the tribunal approved the giving of the notice in accordance with paragraph 3." (FA 2008, Sch 36, para 30(3))

Exception: statutory records relating to supply of goods or services etc.

"(1)     This paragraph applies to a taxpayer notice or third party notice that refers only to information or documents that form part of any person's statutory records and relate to—

(a)     the supply of goods or services,

(b)     the acquisition of goods from another member State, or

(c)     the importation of goods from a place outside the member States in the course of carrying on a business.

[...]

(3)     Where a person is given such a notice, the person may not appeal against the notice or any requirement in the notice." (FA 2008, Sch 36, para 34(1), (3))

Powers to copy and remove documents inspected

 

See I-3: Taxpayer notices

Appealing notice
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