CH23100 | Information & Inspection Powers: Information notices: banks

HMRC has an arrangement with UK Finance under which a taxpayer-approved third party information notice may be issued to a bank in certain circumstances. If the conditions set out below do not apply, you must use a tribunal-approved notice or a Financial Institution Notice (FIN), not a taxpayer-approved notice. A FIN will not need taxpayer or tribunal approval. It will, however, require the approval of an authorised officer (CH21720). For guidance on when to issue a FIN, see CH23105.

One of the risks of using a taxpayer-approved notice is that it can lead to an expensive contested appeal hearing. This guidance aims to reduce that risk, which creates extra costs for both HMRC and the bank (and potentially the taxpayer).

Where possible, the required documents or information should be obtained firstly from the taxpayer, using a taxpayer notice if necessary, and secondly from the bank through the use of a mandate signed by the taxpayer. Only if both these methods fail to produce what is required should you issue a third party notice to the bank. You must never make an informal request to a bank.

Taxpayer-approved notice

• If the material sought consists only of bank statements for an account to which the taxpayer is signatory:

• The taxpayer must be asked to obtain the statements from the bank at their own cost. If the taxpayer cannot be trusted to transmit the material to HMRC without distortion, a mandate should be requested.

• If the taxpayer refuses to obtain the statements or give a mandate, all reasonable steps must be taken to persuade them to do so. If tax-geared penalties are a possibility, you should explain that the penalty can be reduced if the taxpayer saves HMRC the trouble of having to use formal information powers.

• If nevertheless the taxpayer refuses to obtain the material, but would agree to approve a formal notice, the agreement of a Grade 7 must be obtained before this is done. The Grade 7 must be satisfied that the steps described in the above two bullet points have been taken.

• If the material sought is not solely bank statements, or relates to an account for which the taxpayer is not a signatory:

• Approach the bank with a draft notice and ask the bank whether they would expect to have to appeal such a notice. Ask them to suggest any alterations which would make the notice acceptable to them. (See CH232600 for how to contact banks).

• If a draft can be agreed which reduces the risk of an appeal whilst still obtaining the material you need, then taxpayer approval may be sought. The agreement of a Grade 7 must be obtained before the notice is issued.

• Otherwise, you will need to seek tribunal approval for your notice.

Note that it is always open to you to decide to go down the tribunal-approved route from the start.

Further information on giving notices to banks is at CH232000.

FA08/SCH36