Chapter 24 PCRT: Request for data by HMRC help sheet Flashcards
24.2 Introduction
A distinction should be made between a request for data made informally and those requests made in exercise of a power to require the provision of the data requested (formal). Requests addressed to client and addressed to a member require different handling. When no longer acting for a client informal requests by an enquirer should be referred to the former client or if authorised by the client the new agent. With formal requests, the termination of the relationship does not affect the member’s duty to comply with that request where they are legally required to do so.
24.3 Informal requests
Addressed to client - HMRC can choose to communicate directly with clients rather than the agent. When a member assists a client in dealing with HMRC, the member should advise the client that cooperation with informal requests can provide opportunities for the taxpayer to find a pragmatic way on issues with HMRC.
Addressed to member – disclosure to respond can only be made with the client’s permission, this may have been authorised by the engagement letter. If there is any doubt about authorisation, the member should ask the client to approve what is to be disclosed. Where an oral enquiry is made by HMRC, a member should consider asking for it in writing so that a response can be agreed with the client. Although there is no legal obligation to comply with an informal request, a member should advice the client it is within their best interests to disclose such data. Informal requests may be forerunners to formal requests compelling the disclosure of data.
24.5 Formal requests
Addressed to the client – a member should consider if specialist advice is needed. They should advise the client about any relevant right of appeal against the formal request if appropriate and the consequences of failing to comply. If the notice is legally effective the client is legally obliged to comply with the request.
Addressed to the member – same principles apply to formal requests to the member as formal requests to the client. If the formal request is valid it overrides the members duty of confidentiality to their client. failure to comply with their legal obligations can expose the member to civil or criminal penalties. In cases where the member is not legally precluded by the terms of the notice, they should advise the client of the notice and keep the client informed on developments. The member should ensure that in complying with any notice they do not provide information or data outside the scope of the notice.
24.7 FA2008 Statutory Notices
Most common statutory notice issued to clients by HMRC is under schedule 36 of the FA 2008. This allows a taxpayer to provide data reasonably required to check their tax position. HMRC can also inspect business premises and remove and copy data. A member should be aware of the rules and their right to appeal. The following points in relation to a member’s conduct should be noted:
• HMRC can only issue a notice to a third party where it is approved by the First-tier tribunal or where the taxpayer to whom the notice relates agrees
• HMRC may agree to extend the deadline for submission of the data depending on the circumstances. Any request for more time should be made in advance of the deadline where possible
• Schedule 36 does not allow HMRC to force entry to premises and the client can refuse HMRC, however this should only be done where the client has good reasons
• A schedule 36 notice does not override legal professional privilege.
24.8 Privileged data
Legal privileged data arises under common law and may only be overridden if set out in legislation. It protects a party’s right to communicate in confidence with a legal adviser, the privilege belongs to the client and not the member. If the document is privileged HMRC cannot make a client disclose that document, another party cannot disclose it without the client’s permission. There are two types of legal privilege under common law:
Legal advice privilege – covers documents passed between a client and their legal adviser. However, communications from a tax adviser who is not practising law does not get legal advice privilege, even when giving advice on tax law.
Litigation privilege – covers data for the purpose of litigation. This arises where litigation has not begun but merely contemplated and can apply to data prepared by non-lawyer advisers. The limits are it does not arise in respect of non-adversarial proceedings and the documents must be produced for the dominant purpose of litigation.
A privilege for documents relating to the conduct of a pending appeal might exist by quasi-privilege and if this is the case a tax adviser does not have to provide documents. Tax advisers should take legal advice on the position of privilege or quasi-privilege.
