Information requests
Is it reasonably required?
HMRC's main function is the collection of tax and investigation is part of that statutory duty. The Courts have often reminded appellant taxpayers that HMRC officers are legally obliged to ask questions so that HMRC can ensure that the right amount of tax has been paid by everyone. While HMRC has a duty to enquire, taxpayers do have some protections against excessive or unwarranted HMRC requests.
Broadly, HMRC can request information or documentation that is reasonably required for the purposes of checking a tax position. The law has adapted to the digital age, and allows HMRC to request information regarding past and current periods. Requests can be made directly to individuals and businesses, or to third parties or financial institutions. There are safeguards against requests for certain old or privileged documents, as well as statutory record keeping requirements for businesses and individuals.
Once HMRC flags that there are risks of tax loss, the requests for information and documents that follow may be extensive and time consuming to respond to. Managing these requests is key to successful tax dispute resolution. While it is important to be clear on HMRC’s legal powers, it is better to be able to persuade HMRC than to get trapped in sterile disputes over the fine points of the law. The art is to anticipate HMRC’s concerns, and ensure that what is provided supports resolution.
