HMRC information requests can appear similar in correspondence but carry very different legal consequences. An officer may begin a compliance check by asking informally for records and explanations. The same officer can later issue a formal taxpayer notice under Schedule 36 to the Finance Act 2008, making compliance a statutory obligation and potentially exposing the taxpayer to penalties for failing to respond.
The correct approach is not to refuse every informal request or comply uncritically with every demand. The request should be analysed for its legal basis, relevance, scope and connection with the tax position under review.
How HMRC Information Requests Differ
An informal request invites voluntary cooperation. It may ask for explanations, bank statements, calculations, invoices or supporting schedules without referring to statutory powers. There is no statutory appeal against an informal letter because it is not itself a formal decision or notice.
That does not mean it should be ignored. A measured response can resolve the issue without escalation, while silence may lead HMRC to formalise the request. The taxpayer can ask the officer to explain why particular records are relevant, narrow an excessively broad period or agree additional time where the information cannot reasonably be assembled by the requested date.
A statutory taxpayer notice should identify that it is issued under Schedule 36. HMRC may require statutory records and other information or documents that are reasonably required to check the person’s tax position or collect a tax debt. The material must also be within the person’s possession or power.
HMRC Information Requests Must Be Reasonably Required
The statutory test is not whether the requested document will definitely establish additional tax. HMRC can seek material that is reasonably required to carry out the check. The request must nevertheless relate to a genuine tax position and remain subject to legislative restrictions.
The Schedule 36 information powers restrict access to certain material, including legally privileged communications, some documents relating to a pending appeal, personal records and specified advisers’ or auditors’ papers. The existence of a compliance check does not give HMRC unrestricted access to every document connected with the taxpayer.
Confidentiality alone is not the same as legal privilege. Commercial sensitivity or an adviser-client relationship does not automatically prevent production, and the relevant restriction can depend on whether the notice is served on the taxpayer or the adviser.
HMRC Information Requests Issued as Statutory Notices
A taxpayer notice can usually be appealed, either in full or against individual requirements. The appeal must be in writing, reach HMRC within 30 days of the date on the notice and state the grounds of appeal.
There is no ordinary appeal against a requirement to produce statutory records, nor against a notice approved in advance by the tribunal. The appeal rights for taxpayer notices should therefore be checked before assuming that every item in the notice can be challenged.
Possible grounds may include that the information is not reasonably required, the request is unduly onerous, a document is outside the taxpayer’s possession or power, or a statutory restriction applies. An appeal should identify the disputed requirement precisely rather than objecting to the entire check in general terms.
Informal and Statutory Responses Require the Same Accuracy
Whether the request is informal or statutory, the response should be complete, accurate and reconciled to the return. Providing inaccurate information can create further penalty exposure, particularly where the error is careless or deliberate.
Missing records should be explained rather than reconstructed as though they were original documents. Where estimates are unavoidable, the method and limitations should be stated clearly. A large unstructured document dump can be as damaging as an incomplete response because it may obscure the explanation and generate additional questions.
The response should normally include an index, a covering explanation, the relevant reconciliation and a record of what has been supplied. Irrelevant personal or third-party material should be separated where legally appropriate rather than included without review.
The Legal Basis Should Be Identified at the Start
A properly managed HMRC compliance check begins by identifying the tax periods, statutory powers and specific risks under examination. Where the request suggests suspected deliberate behaviour, undeclared income or wider irregularities, an HMRC tax investigation may require a more formal strategy before substantive explanations are provided.
Disclaimer: This article is provided for general guidance only and does not constitute personal tax, legal or financial advice. The correct tax treatment depends on the specific facts, applicable legislation and HMRC practice at the relevant time. You should contact us for advice tailored to your circumstances before taking or refraining from any action.
