Guidance

Compliance checks: financial institution notice — CC/FS60

Updated 20 May 2022

We’ve given you this factsheet because we’ve given 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 give us certain information and/or documents. This is so we can check another person’s tax position or take steps to collect another person’s tax debt.

We refer to the person whose tax position we’re checking, or whose tax debt we are taking steps to collect, as the ‘first party’.

When we use financial institution notices

Sometimes, when we’re checking a person’s tax position or taking steps to collect a tax debt, we may need information from a financial institution. This could be because:

• the first party has not been able to give us information that we need or has refused to
• we need to independently check business or financial transactions that have taken place, or
• we have been asked by an overseas tax authority to gather the information in line 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 it relates to (unless the tribunal has decided it does not need to)
• which documents and/or information you must give us
• how and when to give us what we need
• about any appeal rights
• not to disclose the notice to the person it relates to, or anybody else except for the purpose of complying with the requirements of the notice (if the tribunal has decided this is appropriate)

What information and documents we can ask for in a financial institution notice

We can ask for information and/or documents if we believe they’re required for our check of the first party’s tax position or will help us with collecting a tax debt. It must be reasonable for us to ask for them.

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

• that are not in their possession and they cannot get the documents, or copies from whoever holds them
• that relate to the tax position of a person who died more than 4 years before the notice is issued
• that have been created as part of the preparation for a tax appeal
• that are concerned solely with a person’s physical, mental, spiritual or personal welfare
• that are privileged communications between lawyers and clients for the purpose of getting or giving legal advice
• that would be onerous for the financial institution to provide

The rules about what information and documents fall into these categories, especially personal or privileged communications, can be complicated. If you think that anything we’ve asked for may fall into one or more of these categories, please speak to the officer who gave you this factsheet.

What to do if you disagree with a financial institution notice

You cannot appeal against a financial institution notice.

You should speak to the officer who sent you this factsheet if you:

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

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

To comply with the notice, you must give us everything that the notice asks for, by the date stated in the notice — or by a later date if we’ve agreed one with you. If you do not comply with the notice, we may charge you a penalty of £300. If you have still not complied with the notice by the time we’ve charged you the £300 penalty, we may then charge you daily penalties of up to £60 a day for each day that you do not comply.

Any information you give us must be correct as far as you know. If you give us information or documents that you know are wrong without telling us what is wrong, then you may have to pay a penalty up to a maximum of £3,000.

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

For the most serious cases the upper-tier independent tribunal can also impose a further penalty. This is based on the tax that’s put at risk by the failure to comply with the notice, concealment, disposal or destruction of the document.

If we agree that you have a reasonable excuse for not giving us information or documents, we will not charge you a penalty. However, we’ll still ask you to provide the information, documents (or replacement documents) within an agreed amount of time.

A reasonable excuse is something that stopped you from meeting a tax obligation on time which you took reasonable care to meet. It might be due to circumstances outside your control or a combination of events. Once the reasonable excuse has ended, you must put things right without any unnecessary delay.

Whether you have a reasonable excuse depends upon 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 tell us.

Examples of reasonable excuse may include, when:

• you’ve been seriously ill
• someone close to you has died
• you’ve lost the documents in a fire or flood

The notice might also include a requirement not to disclose the notice, or anything relating to it, to the taxpayer or any person except for a purpose relating to compliance with the notice. We include this requirement when the tribunal has agreed that we can disapply the legal requirements to:

• name the taxpayer in the notice
• provide a summary of reasons for issuing the notice to the person it relates to

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

Your principal rights and obligations

You have:

• the right to check with your adviser — we’ll allow a reasonable amount of time for you to do so
• an obligation to take care to get things right — if you have an adviser, you must still take reasonable care to make sure that any returns, documents or details they send 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 factsheet relates to compliance checks into any of the following:

• Aggregates Levy
• Annual Tax on Enveloped Dwellings
• Apprenticeship Levy
• Bank Payroll Tax
• Capital Gains Tax
• Climate Change Levy
• Construction Industry Scheme
• Diverted Profits 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 Revenue Tax
• Relevant Foreign Tax
• Soft Drinks Industry Levy
• Stamp Duty Land Tax
• Stamp Duty Reserve Tax
• VAT

*For Class 1A National Insurance, this factsheet only relates to P11D(b) returns for tax years starting on
or after 6 April 2010.

More information

If you’re not happy with our service tell the person or office you’ve been dealing with. They’ll try to put things right. If you’re still not happy, they’ll tell you how to make a formal complaint.

This factsheet is one of a series. For the full list, go to www.gov.uk and search for
‘Compliance checks factsheets’.

Our privacy notice

Our privacy notice sets out the standards that 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’.