Policy paper

Reforming civil tax information and inspection powers (Schedule 36 Finance Act 2008) and modernising the definitions about computer records (s114 Finance Act 2008)

Published 13 July 2026

Who is likely to be affected 

The reforms under this measure will mainly affect third parties including, but not limited to, financial service providers and cryptoasset service providers, who may be asked to provide information and documents for the purpose of checking the tax position of a taxpayer or collecting a tax debt when required by identification, third party or financial institution notices. 

UK taxpayers who are the subject of the information request could also be affected, including personal representatives of deceased taxpayers.  

Taxpayers, third parties and intermediaries (including software providers) who hold or manage relevant tax information using digital systems or cloud‑based services will be impacted by the updates about computer records. 

General description of the measure 

This measure introduces a number of reforms to modernise HMRC’s civil information and inspection powers under Schedule 36 Finance Act 2008 (Schedule 36) and section 114 of Finance Act 2008 (s114) including: 

• amendments to the time limit for issuing an information notice for the purpose of checking the tax position of a person who has died. 

• expanding the scope of the Financial Institution Notice (FIN) to capture cryptoasset service providers. 

• removing the statutory requirement to produce the FIN annual report (HMRC will continue to publish the FIN data for transparency and scrutiny). 

• changes to the process for issuing an identification notice and updates to the types of identifying information that can be requested. 

• updating s114 so that it works effectively in a modern, digital tax system. It reflects the way tax information is now created, stored and processed using software, automated systems and cloud-based services. The changes enable HMRC, where it already has the legal right to request information, to obtain and understand that relevant information held within digital systems. This includes information about how relevant tax figures have been produced and where they are generated using software or automated processes to support more accurate tax reporting and strengthen compliance. 

All changes will be subject to proportionate safeguards to protect the rights of taxpayers and third parties, whilst balancing HMRC’s need to access information to support its compliance activity. 

Policy objective 

These reforms will help to ensure HMRC continues to have access to the information it needs, in a timely manner to support domestic compliance checks. This in turn will drive casework efficiency to ultimately make sure the correct amount of tax is collected and to tackle evasion and avoidance activity that seeks to undermine the tax system.  

HMRC uses these same powers to provide information requested from overseas tax authorities under international exchange of information agreements. Amending the time limit for issuing a notice to check the tax position of a person who has died is required to bring the UK in line with international standards and ensure the UK can continue to meet those standards going forward. 

The s114 reforms aim to keep the tax system fair and effective by ensuring HMRC can access, check and inspect digital tax records, including those managed by third parties. This promotes consistent treatment for all taxpayers and supports a level playing field in the modern digital economy. 

Overall, the reforms contribute to a simpler and more resilient tax system by ensuring that existing information and inspection legislation operates effectively as technology evolves, helping maintain trust, support compliance, and reinforce the integrity of the tax system. 

Background to the measure 

HMRC launched a Call for Evidence on updating its information and inspection legislative powers in 2023, alongside engagement with stakeholders including software providers and industry representatives. It asked about the wording of s114 and the principle of extending HMRC’s powers to allow for investigation of commercial taxation software. Some respondents, whilst not objecting to sharing how tax software information produces a tax calculation, raised considerations around the mechanism for achieving this goal detailing issues in relation to intellectual property. This led to further policy development and the announcement at Tax Update 2026 of a consultation on the draft legislation. 

The changes to Schedule 36 are in response to changes from the Organisation for Economic Co-operation and Development to maintain international standards in exchange of information, as well as some technical changes around how HMRC operates the powers to issue notices. 

This measure was announced at Tax Update 2026. 

Detailed proposal 

Operative date 

This measure will have effect on and after the date of Royal Assent to Finance Bill 2026-27. 

Current law  

This measure will amend current law governing HMRC’s civil information and inspection powers. It is found in Schedule 36 and Section 126 of the Finance Act 2021.  

It also amends s114 that makes provision in relation to references to documents, including those held in electronic form. It applies to any statutory provision in relation to an HMRC matter which requires production or the inspection of documents, which includes the information and inspection powers in Schedule 36. 

Proposed revisions 

A number of primary legislative changes to Schedule 36, section 126 of the Finance Act 2021 and s114 will be introduced in Finance Bill 2026-27 as outlined below. 

Currently, an information notice given for the purpose of checking the tax position of a person who has died cannot be issued more than 4 years after the person’s death. This will be updated to allow HMRC to issue an information notice more than 4 years after the person has died, subject to tribunal approval for all notices except for the FIN where a HMRC authorised officer’s approval is required as per current approval process.  

Changes will be introduced to the FIN to bring into scope businesses that provide services relating to cryptoassets and payment service providers that facilitate payments in connection with those services.  

Updates will be made to the identification notice to allow any HMRC officer to issue the notice, but an authorised officer will continue to approve the notice. Identifying information that can be requested under the notice to help identify the taxpayer will be extended to include other unique identifiers such as National Insurance number and email address.  

The requirement to produce the annual Parliamentary report on HMRC’s use of the FIN power under Section 126(5) to (8) of the Finance Act 2021 will be repealed. 

The reforms will amend s114 to clarify references to information held in digital and electronic form.  

In addition, for example, where a notice under Schedule 36 is issued to a third party or intermediary, the requirement may extend to relevant information held or managed by that third party or intermediary in digital or electronic form, including what is needed to understand how relevant tax figures have been produced.  

These changes do not create a new standalone information power. Section 114 will continue to operate only as a supporting provision, applying where HMRC already has a lawful basis to require information under Schedule 36. Existing statutory safeguards, such as the condition that information or documents are reasonably required to check a tax position, will continue to apply. 

The changes will be made through primary legislation in Finance Bill 2026/27. Any necessary updates to guidance will be made in due course and published alongside the commencement of the measure. 

Summary of impacts 

Exchequer impact (£m) 

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
-	Nil	Nil	Nil	Nil	Nil

This measure is not expected to have an Exchequer impact. 

Macroeconomic impact 

This measure is not expected to have any significant macroeconomic impacts. 

Impact on individuals, households and families 

Reforming the time limit for issuing an information notice to check the tax position of a person who has died could have an impact on individual personal representatives of the deceased who could be asked to provide information. However, the number of individuals impacted is expected to be very low and individuals will only be required to provide the information if they have it in their power and possession. 

Changes to the identification notice could also have an impact on individuals who are the recipient of the notice who will be asked to provide additional identifying details, but they will only be expected to provide those if they hold them. The number of individuals impacted is expected to be low, as the recipients of this notice are generally businesses. 

These changes are otherwise expected overall to have no impact on individuals’ experience of dealing with HMRC. 

The changes to the FIN and the reporting requirement are not expected to have any direct impact on individuals. 

The s114 reforms will impact individuals from whom HMRC requests information. It clarifies that information and records can be obtained and provided in a wider variety of formats, reflecting how information and records are held in modern digital environments. 

These individuals will continue to provide information to HMRC when reasonably required to check a tax position or collect a tax debt. In some cases, they may need to provide information in the format which it is held. This does not change the purpose of information that can be required and existing safeguards will continue to apply.  

The s114 reforms are not expected to impact individuals’ experience of dealing with HMRC, as they do not introduce new processes or tax administration obligations.  

The measure is not expected to impact on family formation, stability or breakdown. 

Equalities impacts 

This measure may apply to individuals regardless of their protected characteristics. HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and therefore cannot assess if there are any disproportionate impacts to protected groups. 

Administrative impact on business including civil society organisations 

These changes are collectively expected to have a negligible impact on administrative costs for businesses and civil society organisations. 

Reforming the time limit for issuing an information notice to check the tax position of a person who has died could result in more information notices being issued that businesses will need to respond to. Any request made by HMRC will take into consideration the circumstances and businesses are only required to provide the information if it is available. Any increase in the number of notices as a result of this change is expected to be very low. 

Changes to the scope of the FIN could mean that those entities being brought into the FIN’s remit will receive more notices requesting information and documents. Some of these entities may already provide HMRC with information under a third party information notice but would also have to familiarise themselves with the FIN process.  

The number of businesses impacted by the FIN changes will be in the 100s but HMRC’s experience with the FIN to date shows most notices tend to be issued to the larger and more established institutions.  

One-off costs will include familiarisation with the changes and on-going costs could include providing HMRC with more information.  

Removing the FIN annual reporting requirement is not expected to have any direct impact on businesses.  

More information being requested under an identification notice may mean a response will take longer to compose for the business, but it would be limited to identifying information and provided only if held by the business.  

The s114 reforms will impact businesses from which HMRC requests information. It clarifies that information and records can be obtained and provided in a wider variety of formats, reflecting how information and records are held in modern digital environments.  

Only when an approach to a taxpayer fails is a third party approached for information or documents and this would result in ongoing costs. The approach to examining software would continue to be on a voluntary basis first. Existing safeguards will continue to apply. One-off costs will include familiarisation with the change. Ongoing costs may arise for some third parties in responding to notices. 

Overall, these reforms are not expected to impact businesses’ experience of dealing with HMRC, as they do not introduce new processes or tax administration obligations, but a wider variety of information may be provided by businesses. It ensures HMRC can obtain information that already exists in systems where it is legally entitled to. 

These reforms are not expected to disproportionately impact civil society organisations. 

Operational impact (£m) (HMRC or other) 

HMRC may need to make some minor changes to IT systems to support the changes under this measure. Work is on-going to quantify those impacts, but any costs are expected to be negligible. 

Other impacts 

The measure overall may result in some changes impacting third party information notices requiring tribunal approval. 

Other impacts have been considered and none have been identified. 

Monitoring and evaluation 

Consideration will be given to monitoring the changes to the FIN through information collected from the annual publication of the number of FINs issued and kept under review each year.  

Further advice 

If you have any questions about this change, please contact the information and disclosure policy team at civilinfoandinspectionpowerspolicy@hmrc.gov.uk.