CH177010 - Sanctionable conduct by tax advisers: file access notice: overview

In certain circumstances, we are able to issue a notice to request relevant documents. This is called a ‘file access notice’. We may issue a notice in two circumstances, known as Case A and Case B.

We may issue a file access notice where:

  • we have reasonable grounds to suspect a tax adviser is engaging in, or has engaged in, sanctionable conduct (Case A), or
  • a tax adviser has been convicted of an offence relating to tax that involves fraud or dishonesty (Case B).

We may issue a file access notice to a tax adviser, or another person that we believe holds relevant documents (the ‘document-holder’), requiring them to provide the documents.

Where we have decided to issue a file access notice to the tax adviser, we may (but don’t have to) first obtain approval from the Tribunal. Where approval from the Tribunal is obtained, the tax adviser cannot appeal the file access notice. Where approval from the Tribunal is not sought, the tax adviser may appeal the file access notice or any requirement within it.

Where we have decided to issue a file access notice to a person who is not the tax adviser (a third party document-holder), we must first obtain approval from the Tribunal. That person can appeal (to the Tribunal) against the file access notice on the grounds that it would be unduly onerous to comply with it.

‘Relevant documents’ are the tax adviser’s working papers and other documents received, created, prepared or used in assisting clients with their tax affairs.

If we issue a file access notice under Case A, we may only require relevant documents relating to the tax adviser’s clients in respect of whom we have reasonable grounds to suspect the tax adviser engaged in sanctionable conduct. Those clients must be identified in the file access notice.

There are certain documents, parts of documents, and information that can’t be requested using a file access notice (under either Case A or Case B). These include:

  • documents that are not in the person’s possession or power,
  • information relating to a pending tax appeal,
  • personal records,
  • journalistic material,
  • where the document is over 20 years old, and
  • where the information is legally privileged.

Unlike requests made under Schedule 36 FA 2008, tax advice and tax audit papers can be requested unless the relevant documents separately fall into any of the above categories. The ability to request documents using a file access notice is supplementary to the powers available to us under Schedule 36 FA 2008, see CH23000+.

If a person fails to comply with a file access notice, they may be liable to:

  • an initial penalty of £300 for failure to comply,
  • daily penalties of up to £60 a day for each day the person’s failure continues after notification of the initial £300 penalty, and
  • if the person’s failure continues for more than 30 days from the point at which they became liable to daily penalties, then HMRC may apply to the Tribunal to increase the daily penalty amount from up to £60 to up to £1000.

If the Tribunal decides that a person should be liable to an increased daily penalty, the Tribunal will determine that increased penalty amount and must have regard to the likely cost to the person of complying with the notice and any benefits accruing to the person (or another person) through not complying with it. Once the Tribunal has decided the new penalty amount and the date from which it is to apply, HMRC must notify the person of these facts.

We will not charge initial and daily penalties if the person has a reasonable excuse for failure to comply with the file access notice.

If a person provides a document containing an inaccuracy in response to a file access notice, they are liable to a penalty of up to £3,000 for each inaccuracy where:

  • the inaccuracy is deliberate or due to a failure by the person to take reasonable care,
  • the person knows of the inaccuracy at the time the document is provided but does not inform HMRC at that time, or
  • the person discovers the inaccuracy some time later and fails to take reasonable steps to inform HMRC.

A person commits an offence if they:

  • conceal, destroy or otherwise dispose of a ‘required document’, or
  • arrange for the concealment, destruction or disposal of a required document.

A required document is a document the person is required by a file access notice to provide or a document which (in the last six months) we have told the person is likely to be required by a file access notice.

The person can be prosecuted for the offence, or charged penalties, but not both.

FA12/SCH38/PARAS7 – 25 as amended