Information Powers
HMRC have three main types of inspection notice.
Taxpayer notice
The taxpayer is required to provide information or documentation to enable HMRC to check their tax position. Whilst there is the right for the taxpayer to appeal the notice, there is no right of appeal against requests for statutory records (basically those that have to be retained for tax purposes).
Third party notice
The person served with the notice is required to provide information and / or documentation in respect of another person's tax position. To use these notices, HMRC must have the consent of either the person whose tax position is being checked, or the tribunal.
Identity unknown notice
HMRC can check the UK tax position of a person, or class of persons, whose identity is unknown to them.
Failing to comply with a notice can result in 3 types of penalty. An initial standard penalty of £300, followed by daily penalties of up to £60 per day, and / or a tax related penalty (which would be determined by a tribunal)
Whilst the notices cover a wide remit, they do not give HMRC automatic access to everything! Certain items (such as legally privileged information) are specifically excluded from the powers.
In addition, the information requested needs to be reasonably required to check the tax position. It is advisable to bear this in mind when dealing with such a notice, and we are happy to provide advice on the validity of information notices.