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Tax Note: Financial Institution Notices (FIN) – Financial Services



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Paragraph 4A of Schedule 36 to the Finance Act
(“FA”) 20081 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:

    1. It must not be ”onerous for the institution to provide or
      produce” the information, and

    2. 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.


  3. 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.

  4. Neither the FTT’s approval, nor the taxpayer’s
    consent, is necessary to issue a FIN.  A financial institution
    cannot appeal against a FIN.

  5. Paragraph 61ZA of Schedule 36 to the FA 2008 establishes that
    financial institution means:

    1. 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

    2. “A person who issues credit cards”.


  6. 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.

Footnotes

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).

Originally Published by 10 March 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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