The March 2021 Budget introduced a new power for the tax authorities – the Financial Institution Notice. This allows HMRC to require financial institutions to provide information about specific taxpayers, without needing approval from the independent Tax Tribunal.
HM Revenue and Customs have been frustrated about the length of time it has taken to get information from banks etc. Tax Officers had to go through a process requiring approval from the independent Tax Tribunal. And that was taking up to 12 months. In this major new extension to the HMRC Information Powers the Financial Institution Notice (FIN) weapon means financial institutions, such as banks and building societies, may be required to supply information and documents for the purposes of checking someone’s tax position, and for debt collection purposes. Taxpayers lose an important safeguard, in that HMRC won’t need approval from the Tribunal for the initial FIN. If the financial institution does not comply then HMRC can charge penalties. Those penalties can be appealed against to the Tribunal.
The new power will also enable HMRC to comply with requests from overseas tax authorities.
The information sought has to be “reasonably required” for the purpose of checking a named person’s tax position. For international requests, the information in the FIN will need to be relevant to the administration or collection of tax; and the country requesting the information would need to have exhausted all reasonable domestic ways to get the information. Exchange of information requests made in accordance with the EU Mutual Assistance Recovery Directive will be included. Documents subject to legal professional privilege cannot be requested. HMRC are required to inform the taxpayer why the information is needed, unless the taxman applies to the Tax Tribunal and gets permission that this condition should not apply.
What does this mean to me?
If you are undergoing a Tax Enquiry then frequently HMRC will request documents such as bank statements. From now on, HMRC are highly likely to approach your bank, or other financial institution, directly: in order to speed up their access to that information. As this new process is a lot more streamlined, Tax Inspectors are far more likely to require, and to obtain, and to examine in detail, bank statements in ongoing Tax Investigations.
How can Lynam Tax Enquiry Experts help me?
If you are undergoing a Tax Investigation or a Tax Compliance Check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call
Paul Lynam now on: 0845 643 9997
or Andrew Nutbrown on: 07718 778710