Guidance

Third party information notices: promoters of tax avoidance schemes — CC/FS74

Published 25 October 2023

This factsheet relates to compliance checks for promoters of tax avoidance schemes (POTAS).

We have given you this factsheet because (either of the following):

• we’ve given you a third party information notice
• we intend to ask the independent tribunal that deals with tax to approve our request to give you a third party information notice

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer that contacted you. We’ll help you in whatever way we can. For more information, go to www.gov.uk and search ‘get help from HMRC if you need extra support’.

You can also ask someone else to deal with us on your behalf. For example, a professional adviser, friend or relative. However, we may still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy of our letter to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

What is a third party information notice for POTAS

For POTAS, a third party information notice is a document that legally requires a person to give us certain information or documents for a relevant purpose in relation to a relevant person. We explain the terms ‘relevant purpose’ and ‘relevant person’ at the bottom of this factsheet.

We refer to the relevant person as the ‘first party’ and we refer to the person we want information or documents from as the ‘third party’. For this factsheet and our third party information notice, you are the third party.

When we use third party information notices

Sometimes when we’re checking a relevant purpose in relation to a relevant person (the first party), we may need information from a third party. This could be because (either of the following):

• the first party has not been able to give us information that we need or has refused to
• we need to independently check records relating to a relevant purpose

We may ask the third party to voluntarily send us the information we need. We may also use an information notice if we need to, or if the third party prefers us to.

When we need permission to use a third party notice

When we need information or documents from a third party, we’ll usually ask the first party to agree to us sending an information notice to the third party. Sometimes we’ll ask the independent tax tribunal for approval to give a third party notice. For example, we’ll do this if (either of the following):

• the first party do not agree to us sending an information notice
• we do not want the first party to know we are asking for the information or documents

When we want to give a third party information notice for business records that the third party is required to keep by law, we do not need:

• the agreement of the first party
• approval from the tribunal

These type of business records are called ‘statutory records’.

There’s more information about what happens when we ask the tribunal for permission to give a third party notice in the section ‘Before we ask a tribunal for approval to give a third party notice’.

What the third party information notice will tell you

A third party information notice will tell you:

• whether the first party has agreed we can give it to you or if it’s been approved by an independent tribunal
• the name of the person it relates to, unless the tribunal has decided it does not need to
• the documents or information you must give us
• how and when to give us what we need
• about any appeal rights

What we can ask for in a third party information notice

We can ask for information or documents if we believe (both the following):

• they are required to check a relevant purpose in relation to a relevant person
• it’s reasonable to ask for them

What we cannot ask for in an information notice

We cannot use an information notice to ask a third party to give us information or documents:

• that are not in their possession and they cannot get the documents, or copies from whoever holds them
• that relate to the tax position of a person who died more than 4 years before the notice is issued
• that have been created as part of the preparation for a tax appeal
• that are concerned exclusively with a person’s physical, mental, spiritual or personal welfare
• that are privileged communications between lawyers and clients for the purpose of getting or giving legal advice
• if the third party is an auditor, tax adviser or journalist and the information or documents have been created for the purposes of their profession
• if the third party is the subject of journalistic material and the information or documents have been created by a journalist for the purposes of their profession

The rules about what information and documents fall into these categories, especially personal or privileged communications, can be complicated. If you think that anything we’ve asked for may fall into one or more of these categories, please discuss this with the officer who gave you this factsheet.

Before we ask a tribunal for approval to give a third party notice

We only need to ask a tribunal to approve a third party information notice when:

• the information or documents we need are not statutory records
• the relevant person has not given us permission to give the third party an information notice or we do not want the relevant person to know that we want to give one

Before we ask an independent tribunal to approve a notice, we’ll give you the opportunity to make representations to us. You can make representations if you do not think you should give us the information or documents we’ve asked for.

We’ll consider any representations you make before deciding whether to ask the tribunal to approve a notice. If we do decide to ask the tribunal to approve one, we’ll give them a summary of your representations. You are not allowed to attend any tribunal hearing.

You are welcome to give us the information or documents voluntarily. If you do, it will mean that we do not need to ask the tribunal for approval to give you a notice. If you want to do this, please send the information or documents we need to the HMRC officer who wrote to you.

What to do if you disagree with a third party information notice

If you disagree with an information notice, you may be able to appeal to the independent tribunal that deals with tax appeals. We’ll tell you if you can appeal and how to do it when we give you the notice.

You cannot appeal against a third party information notice that (either of the following):

• has been approved by an independent tribunal
• is a request for statutory records

You can only appeal against a notice approved by the first party if you think it would be unduly onerous to do what it asks. ‘Unduly onerous’ means that you think the time or financial costs to do what the notice asks would be too high.

What happens if you do not do what a third party information notice asks

If you do not do what an information notice asks, we may charge you a penalty of £300. If you still have not done what the notice asks by the time we issue the penalty, we may charge you a further daily penalty. This will be up to £600 a day until you do.

It is a criminal offence to conceal, destroy or otherwise dispose of any document that we have asked for. Or to arrange for it to be concealed, destroyed or disposed of.

Please take care when doing what an information notice asks. If you carelessly or deliberately provide inaccurate information or produce a document containing an inaccuracy, we may charge you a penalty of up to £5,000. We will not charge you a penalty if you tell us about the inaccuracy at the time you provide the information or produce the document. If you later find an inaccuracy, you must tell us without delay.

When we will not charge you a penalty

If we agree that you have a reasonable excuse for not doing what the information notice asks, we will not charge you a penalty for not doing it. However, we’ll ask you to give us the information or documents, or replacement documents, by an agreed date.

A reasonable excuse is something that stopped you from meeting an obligation on time that you took reasonable care to meet. Whether you have a reasonable excuse depends upon the circumstances in which the failure occurred and your particular circumstances and abilities. Once the reasonable excuse has ended, you must put things right without delay. For examples of what does and does not count as a reasonable excuse, go to www.gov.uk/tax-appeals/reasonable-excuses.

If you think you have a reasonable excuse, please tell us.

What is a ‘relevant person’

A person is a ‘relevant person’ if (one or more of the following):

• we suspect the person carries on or carried on a business as a promoter in relation to a relevant proposal or relevant arrangements, and we suspect that the person (one or more of the following):
  • has met a threshold condition
  • could be given a defeat notice
  • promotes, or has promoted arrangements or a proposal that we suspect could be specified in a stop notice
• we suspect that the person made a relevant transfer, or was someone a relevant transfer was made to
• the person is or was subject to a conduct notice, monitoring notice, or stop notice

We explain all the terms shown in our guidance online. Go to www.gov.uk and search ‘promoters of tax avoidance schemes guidance’.

What is a ‘relevant purpose’

A relevant purpose in relation to a relevant person can be (one or more of the following):

• determining whether the person carries on, or has carried on, a business as a promoter in relation to a relevant proposal or relevant arrangements
• determining whether they have met a threshold condition
• determining whether they can be given a defeat notice
• determining whether they have provided false or misleading documents or information in relation to a conduct notice, monitoring notice, or stop notice
• determining whether arrangements or proposals that we suspect the person of promoting could be specified in a stop notice
• enabling us to understand how arrangements or proposals, that we suspect the person of promoting, operate
• identifying any person whose connection to the relevant person may make the relevant person a member of a promotion structure
• determining whether the relevant person has made a relevant transfer, and if so, to whom
• determining whether a relevant transfer was made to the relevant person and by who
• monitoring compliance with any stop notice, conduct notice, or monitoring notice that the relevant person is subject to

We explain when persons are ‘connected’ in our guidance online. We tell you how to find that guidance in the section called ‘What is a relevant person’. We explain the term ‘promotion structure’ in separate guidance online. Go to www.gov.uk and search ‘tackling promoters of tax avoidance guidance’

More information

If you’re unhappy with our service, tell the person or office you’ve been dealing with. They’ll try to put things right. If you are still not happy, they’ll tell you how to make a formal complaint.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. For more information, go to www.gov.uk and search ‘HMRC Privacy Notice’.