TAX NOTE: FINANCIAL INSTITUTION NOTICES (FIN)


Paragraph 4A of Schedule 36 to the Finance Act (“FA”) 2008 [1] provides HMRC with the power to obtain information and documents from financial institutions via a Financial Institution Notice (“FIN”). According to HMRC, this power was “expected to have a negligible impact on about 20 financial institutions” [2], such as banks and building societies. HMRC is expected to inform the Treasury about the number of FINs issued “as soon as reasonably practicable after the end of each financial year” [3]. Whether they had a negligible impact or not will be known with certainty following that report.


The main features of this power are:


  1. FINs are documents issued by an authorised officer of HMRC to a financial institution requiring production of certain information specified within the FIN.
  2. Two conditions must be met for HMRC to issue a FIN:
  3. It must not be ”onerous for the institution to provide or produce” the information, and
  4. The ”information or document is reasonably required by the officer” to check the tax position of a taxpayer or to collect a tax debt of the taxpayer.
  5. The FIN must contain the name of the taxpayer to whom it relates and the reasons why the information is required. The HMRC officer must give a copy of the FIN to the corresponding taxpayer.
  6. Neither the FTT’s approval, nor the taxpayer’s consent, is necessary to issue a FIN. A financial institution cannot appeal against a FIN.
  7. Paragraph 61ZA of Schedule 36 to the FA 2008 establishes that financial institution means:
  8. Custodial institutions, depository institutions and specified insurance entities, as defined by the OECD’s common reporting standard for automatic exchange of financial account information, or
  9. “A person who issues credit cards”.
  10. Schedule 34 to FA 2021 establishes additional rules for particular circumstances, including penalties for those who breach a requirement imposed under the new paragraph 51A of Schedule 36 to FA 2008.

 


[1] Incorporated by s 126 of the Finance Act 2021.

[2] HMRC, “Amending HMRC’s Civil Information Powers” (3 March 2021).

[3] FA 2021 s 126(4)(5).