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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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How to do a compliance check: information powers: third party notice: where approval is required: general

If you consider a third party notice is reasonably required to check the person’s tax position you must, before issuing the notice, obtain

  • the approval of the person whose tax position is being checked, see CH225420, or
  • the approval of the tribunal, see CH225450.

Except where the conditions at, CH225310 are satisfied.

You will have to decide which route to take, in consultation with an authorised officer if necessary, except where the third party is a bank. You must obtain the approval of the tribunal in every case where the third party is a bank.

Where the third party is not a bank it will often be more appropriate to proceed with the agreement of the person if this can be obtained. Where the first and third parties are closely linked this will usually be the best route to follow. For example the first party is a close company and the third party is the sole director.

You should remember that a notice approved by the person carries an appeal right, whereas a tribunal-approved notice does not. An appeal right means that, you may need to reveal information about the person in any hearing which ought not to be revealed to the third party. You will need to consider the risks involved in having to defend your notice at an appeal hearing in front of the third party. If there are risks of breaching the person’s confidentiality, or of prejudicing your case, you should seek the tribunal’s approval from the start.