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HMRC internal manual

Specialist Investigations Operational Guidance

Information and inspection powers: Schedule 36 FA 2008: taxpayer information notices after assessments or closure notices have been issued

There are restrictions on issuing information notices in relation to a direct tax period for which a tax return has been submitted. Unless you are also asking about VAT or PAYE, you can only issue a notice where either

  • there is an open enquiry, or
  • you have reason to suspect that tax is unassessed.

(See Schedule 36 paragraph 21, FA 2008.)

If you issue a closure notice or (where there is no open enquiry) a protective discovery assessment, you will do so to the best of your judgement. At that point, it is therefore likely that you will meet neither of the above conditions.

It will be for the taxpayer to appeal against your closure notice or assessment, and to produce arguments and information in support of the appeal. But such arguments and information may need to be challenged, and that may mean that you need to obtain further information to support your case. This will not necessarily imply that your closure notice or assessment has become deficient, and you may still not meet either of the above conditions. You would therefore remain unable to use the information notice powers in Sch 36 FA 2008.

There are a number of possible responses to this problem:

  • Avoid the unnecessary premature use of closure notices or protective assessments. See SIOG7206.
  • If the information you are seeking is also relevant to a VAT or PAYE risk for the same taxpayer, you should meet Condition C or D of paragraph 21.
  • If there is a potential tax-geared penalty liability, you could use a taxpayer notice to investigate that liability. Paragraph 64 defines ‘tax position’ as including tax-related penalties. Your notice would then be outside the restrictions of paragraph 21 altogether.
  • There might be a difference between the liability you have covered in your assessment or closure notice, and your continuing suspicions. Investigation of this unassessed but suspected liability would fall within Condition B.
  • If the transfer of assets abroad is involved, consider using s745 ITA 2007.
  • Ask the tribunal to exercise its own powers. See SIOG7207.

Note that the restrictions in paragraph 21 apply only to taxpayer notices, not to third party notices