How to do a compliance check: information powers: third party notice: considerations prior to issue
You should consider whether you can be satisfied in any way other than by issuing a third party notice. You should try, where possible and practical, to get the information or documents you need from the person whose tax position you are checking before approaching another person for them. For example, you should not consider issuing a third party notice to save the person the trouble or cost of providing the information or documents that you need.
If you require an explanation from the third party it may not be practical to ask the person to approach them. You might think that the third party’s explanation the person could pass on to you is likely to be unreliable, or you need to verify facts independently. In those circumstances you would not want to ask the person to get the explanation from the third party.
Where the third party’s taxation affairs are dealt with by Large Business, HMRC will have allocated to it a Customer Relationship Manager (CRM). A CRM contact list is avaliable in the Large Business A-Z. A third party within Local Compliance may have a CRM allocated to it, see Local Compliance Contact Details.
You must talk to the CRM, if there is one, before issuing the notice so they can consider any potential issues.
This does not apply to third party notices to banks for information about an individual customer, where the banks are covered by HMRC’s arrangements with the British Bankers Association (BBA), see CH232000. Banks may however ask you to liaise with the CRM, or may contact the CRM themselves, in connection with a notice that raises particular issues for them.
Informal requests to third parties may produce the required information. If not, the authorised officer should not seek the approval of the tribunal to issue a third party notice unless the information you need cannot be obtained in any other way.
Notices issued to third parties must ask only for information or documents which are reasonably required to check the tax position of a particular named person. See CH227000 if the person or persons’ names are not known.
Any third party notice is likely to impose a burden on the recipient in terms of time and costs. You should consider carefully what information you need and go no wider with your request.
Before you issue the notice you should consider carefully whether that burden is reasonable and proportionate compared with your need to check the person’s tax position. Wherever possible, and in every case where the approval of a tribunal is sought, you should give the third party the opportunity to comment on the extent of the burden and those representations should be carefully balanced against the benefits the information or documents will bring to the progress of your check.
For specific rules relating to third party notices, see CH23620.