Compliance Controls: Notice to Financial Institutions — CC/FS60

We gave you this fact sheet because we gave you a financial institution notice

What is a Financial Institution Notice

A financial institution notice is a document that legally requires a financial institution to provide us with certain information and/or documents. This allows us to check another person’s tax situation or take steps to collect another person’s tax debt.

We call the person whose tax status we are verifying or whose tax debt we are taking action to collect the “first party”.

When we use reviews from financial institutions

Sometimes when we are checking someone’s tax situation or taking steps to collect a tax debt, we may need information from a financial institution. It could be because:

  • the first party was unable to provide us with the information we need or refused to provide us
  • we need to independently verify the business or financial transactions that have taken place, or
  • a foreign tax authority has instructed us to collect the information in accordance with exchange of information rules

What the financial institution notice will tell you

If we send you a Financial Institution Notice, it will tell you:

  • the name of the person to whom it relates (unless the court has decided that it is not required)
  • what documents and/or information you need to provide to us
  • how and when to give us what we need
  • on any right of appeal
  • not disclose the notice to the person to whom it relates, or to any other person, except for the purpose of complying with the requirements of the notice (if the court has decided that it is appropriate)

What information and documents may we request in a financial institution notice

We may request information and/or documents if we believe they are necessary for our verification of the first party’s tax status or will help us to collect a tax debt. It must be reasonable for us to request them.

We cannot use an information notice to ask a financial institution to provide us with information or documents:

  • which are not in their possession and they cannot obtain the documents, or copies from whoever has them
  • that relate to the tax situation of a person who died more than 4 years before the notice was issued
  • which were created in the context of the preparation of a tax appeal
  • which relate solely to the physical, mental, spiritual or personal well-being of a person
  • which are privileged communications between lawyers and clients for the purpose of obtaining or giving legal advice
  • it would be onerous for the financial institution to provide

The rules regarding information and documents falling into these categories, especially personal or privileged communications, can be complicated. If you think anything we have asked for may fall into one or more of these categories, please speak to the agent who gave you this information sheet.

What to do if you disagree with the advice of a financial institution

You cannot appeal a financial institution’s opinion.

You should speak to the agent who sent you this information sheet if you:

  • think it would be onerous to comply with the notice or a requirement of the notice
  • need more time to comply

What happens if you do not comply with a notice from a financial institution

To comply with the notice, you must give us everything the notice asks for, by the date specified in the notice — or on a later date if we agree with you. If you fail to comply with the notice, we may charge you a penalty of £300. If you have still failed to comply with the notice by the time we charge you the £300 penalty, then we may charge you daily penalties of up to £60 per day for each day you fail to comply .

All information you provide to us must be correct to the best of your knowledge. If you provide us with information or documents that you know are wrong without telling us what is wrong, you may have to pay a penalty of up to a maximum of £3,000.

If you conceal, destroy or otherwise dispose of a document that we have requested in a financial institution notice, or cause it to be concealed, destroyed or disposed of, you may have to pay a penalty. If we charge you a penalty, this will be £300. We will then charge you daily penalties of up to £60 per day for each day you fail to comply with the notice.

For the most serious cases, the higher independent court may also impose an additional sentence. This is based on the tax that is endangered by failure to comply with the notice, concealment, disposal or destruction of the document.

If we agree that you have a reasonable excuse for not providing us with information or documents, we will not charge you a penalty. However, we will always ask you to provide the information, documents (or replacement documents) within an agreed period.

A reasonable excuse is something that prevented you from meeting on time a tax obligation that you took reasonable care to meet. This may be due to circumstances beyond your control or a combination of events. Once the reasonable excuse has been completed, you must rectify the situation without unnecessary delay.

Whether you have a reasonable excuse depends on the circumstances in which the failure occurred and your particular circumstances and abilities. This means that what is a reasonable excuse for one person may not be a reasonable excuse for someone else. If you think you have a reasonable excuse, please let us know.

Examples of a reasonable excuse may include, when:

  • you have been seriously ill
  • one of your relatives has died
  • you lost the documents in a fire or flood

The notice may also include a requirement not to disclose the notice, or anything related to it, to the taxpayer or any person, except for purposes related to compliance with the notice. We include this requirement where the court has agreed that we may not enforce legal requirements to:

  • name the taxpayer in the notice
  • provide a summary of the reason for sending the notice to the person to whom it relates

If the notice contains this requirement and the financial institution fails to comply with it, we may charge them a penalty of £1,000.

Your main rights and obligations

You have:

  • the right to check with your advisor — we will give you a reasonable time to do so
  • an obligation to make sure you get it right — if you have an advisor, you must still take reasonable care to ensure that any returns, documents or details they send to us on your behalf are correct

The HMRC charter explains what you can expect from us and what we expect from you.
For more information, go to www.gov.uk and search for ‘HMRC Charter’.

This fact sheet relates to compliance checks in any of the following:

  • Aggregate Tax
  • Annual tax on wrapped accommodations
  • Tax learning
  • Bank payroll tax
  • Capital gains tax
  • Climate change tax
  • construction industry scheme
  • Diverted profit tax
  • Digital Services Tax
  • Corporation tax
  • Income tax
  • Inheritance tax
  • Insurance premium tax
  • Landfill tax
  • National insurance classes 1, 1A* and 4
  • Pay as you earn (PAYE)
  • Petroleum income tax
  • Relevant foreign tax
  • Tax on the soft drink industry
  • Stamp duty Property tax
  • Stamp duty reserve tax
  • VAT

*For Class 1A National Insurance, this information sheet only applies to P11D(b) returns for tax years beginning on
or after April 6, 2010.

More information

If you are unhappy with our service, tell the person or office you dealt with. They will try to work things out. If you are still not satisfied, they will tell you how to file a formal complaint.

This sheet is part of a series. For the full list go to www.gov.uk and search
‘Compliance Checks Fact Sheets’.

Our privacy notice

Our Privacy Notice sets out the standards you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for “HMRC Privacy Notice”.

Comments are closed.