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Schedule 36 Information Notices: HMRC's Power To Demand Documents

A Schedule 36 notice compels documents and triggers escalating penalties. Here's what you can appeal, what you can refuse, and how to respond in time.

Liam Williams

Liam Williams

— 18 min read
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The letter says "Notice to Provide Information and Documents." It lists bank statements, invoices, or emails you weren't expecting to hand over. At the bottom is a date about a month away. Non-compliance triggers a £300 initial penalty, then up to £60 for every day the failure continues, and in the worst cases a tribunal-approved penalty measured against the tax at stake.

But you are not defenceless. Some of what HMRC has asked for may be outside its powers. You may have a right to appeal the notice, but only for a short window—typically 30 days from the date of the notice. Once that window closes, your options narrow sharply.

The statute is Schedule 36 of the Finance Act 2008, in force since 1 April 2009 and amended repeatedly. This guide explains which paragraph HMRC has invoked, and what protection the later paragraphs give you.

What You Are Holding

Schedule 36 authorises four kinds of information notice. The letter should tell you which paragraph it was issued under—often in small print on the first or last page.

Taxpayer notice (paragraph 1). Served on you, about your own tax position. Paragraph 1 requires the material to be "reasonably required" for checking your tax position or collecting a tax debt. Finance Act 2021 added the debt-collection limb to the original check-your-tax purpose.

Third-party notice (paragraph 2). Served on someone else—your accountant, your bank, your business partner—about your tax position. These normally require your written agreement or tribunal approval under paragraph 3. If the tribunal approved it, that fact must appear on the face of the notice (paragraph 6(3)).

Financial institution notice (paragraph 4A). A post-FA 2021 addition. An authorised HMRC officer can serve a bank or building society directly, without tribunal approval, if the request is not "unduly onerous." You are still given a copy unless the tribunal has disapplied that requirement. Before FA 2021, HMRC needed tribunal approval to compel your bank to disclose your affairs.

Unknown identity notice (paragraph 5). Used when HMRC suspects non-compliance by a person or class of persons it cannot name—for example, users of a tax scheme. Requires tribunal approval. You will rarely see one unless you are a scheme promoter or platform operator.

If you have received a taxpayer notice, read on. If a bank or accountant has received a third-party notice about you, see the third-party notices section below.

What The Notice Looks Like

A Schedule 36 notice is usually an HMRC letter with a factsheet (commonly "CC/FS2") enclosed. Near the top you should see which paragraph it was issued under (paragraph 1, 2, 4A, or 5), the officer's name and reference, and a list of numbered items. Near the bottom there is a deadline—usually worded as "by [date]"—and a line telling you what happens if you disagree, including your right of appeal and the 30 days window. If the notice was pre-approved by the tribunal, that must appear on the face of the notice (paragraph 6(3))—so check. Most notices are not pre-approved.

Getting a formal notice does not mean you are under suspicion. HMRC often formalises a request that started as informal correspondence, simply to stop the clock on an enquiry or to lock in a specific list of items. Formalisation is routine, not escalation.

Can You Appeal It?

Your first question is whether the notice is appealable at all. Two exceptions cut out most of the ground.

Tribunal-approved notices cannot be appealed. Paragraph 29(3) removes your right of appeal where the notice was given with tribunal approval under paragraph 3. The theory is that the tribunal has already tested the reasonableness at the approval stage. Your only remaining route is judicial review—expensive and difficult; see R (Derrin Brothers Properties Ltd) v HMRC [2016] EWCA Civ 15 and R (Jimenez) v FTT [2019] EWCA Civ 51.

Statutory records cannot be appealed. Paragraph 29(2) removes your right of appeal against any part of a notice that requires statutory records—records you are already required by law to keep. More on what counts as a statutory record below.

If your notice survives those two exceptions, paragraph 29(1) gives you an appeal right against the notice or any of its requirements. The window is 30 days from the date of the notice. The appeal must be in writing and state grounds (paragraph 32). Notices of appeal go first to HMRC, not the tribunal. If HMRC disagrees, the dispute is then notified to the FTT.

The tribunal can confirm the notice, vary it (for example by narrowing the list of documents), or set it aside. Its decision is final: paragraph 32(5) removes the usual onward appeal to the Upper Tribunal on the notice itself. Later penalty decisions can still be appealed separately.

The One-Shot Rule

You get one bite at this. In R (PML Accounting Ltd) v HMRC [2018] EWCA Civ 2231, the Court of Appeal held that all objections to a notice—scope, reasonableness, privilege, statutory records, timing—must be raised in the single paragraph 29 appeal. PML had appealed only the compliance deadline, settled under section 54 TMA, and then tried to attack the notice's validity when HMRC later imposed daily penalties. The FTT thought it could revisit validity; the Court of Appeal said no.

If you are going to appeal, put every ground you can think of into the appeal notice. Grounds you leave out cannot be resurrected later. Our guide to writing grounds of appeal covers the structure.

What An Appeal Letter Looks Like

Send it in writing to the officer who signed the notice (their name and address are on the letter). A minimal structure:

Subject: Appeal under paragraph 29 of Schedule 36 FA 2008 — Notice dated [date], reference [ref]

I appeal against the notice referenced above.

My grounds are:

  1. Item [n] is not reasonably required for checking my tax position because [reason].
  2. Item [n] is covered by legal professional privilege under paragraph 23 because [reason].
  3. [Further grounds.]

I invite HMRC to withdraw or vary the notice accordingly. If HMRC does not agree, please notify the appeal to the First-tier Tribunal.

Keep a dated copy and proof of posting. If you are not sure which documents fall in which category, ask HMRC for clarification in the same letter rather than simply refusing—an unexplained refusal can look like non-compliance.

What You Can Refuse

Not everything HMRC asks for is fair game. Part 4 of Schedule 36 is the "shield" cluster—restrictions on what HMRC can require regardless of which paragraph the notice was issued under.

Paragraph 23 excludes information or documents covered by legal professional privilege (LPP). LPP has two branches: legal advice privilege (client–solicitor communications for the purpose of giving or receiving legal advice) and litigation privilege (communications made for the dominant purpose of pending or contemplated litigation).

You can refuse to produce a privileged document and state that it is being withheld on privilege grounds. Advice from an accountant or non-lawyer tax adviser is not covered by LPP, even where it looks like legal advice—see R v Special Commissioner, ex p Morgan Grenfell & Co Ltd [2002] UKHL 21. There is a separate, narrower protection for tax advisers in paragraph 25 (below). If HMRC disputes a privilege claim, the taxpayer refers the dispute to the FTT under SI 2009/1916, which directs what—if any—part of the material must be disclosed.

In Colin Wiseman v HMRC [2022] UKFTT 75 (TC), the FTT applied the Jet2.com dominant-purpose test and held that parts of the requested material were covered by LPP. Lawyer–client correspondence about a transaction will ordinarily qualify; timetables, flowcharts, and pure accountancy advice will not. Parker Hannifin (GB) Ltd v HMRC [2023] UKFTT 971 (TC) took a similar approach to a notice requiring electronic search results—varied to exclude privileged documents and material not reasonably required.

Personal Records And Journalistic Material (Paragraph 19)

Paragraph 19 protects three categories: information relating to the conduct of a pending tax appeal (paragraph 19(1)(a)); journalistic material as defined in section 13 PACE 1984 (paragraph 19(1)(b)); and personal records as defined in section 12 PACE (paragraph 19(2))—records containing personal information about identifiable living individuals held in connection with counselling, medical treatment, welfare, and similar contexts.

The personal-records protection is narrower than it looks. Paragraph 19(3) allows HMRC to require the documents with personal information redacted, and to require non-personal information held within them. Not a blanket immunity.

Old Documents (Paragraph 20)

Paragraph 20 prohibits a notice from requiring documents that wholly originate more than 6 years before the date of the notice—unless the notice is given or agreed by an authorised officer. Routine notices are signed by an ordinary compliance officer; if HMRC wants older records, a more senior officer must sign or approve.

Check the signature block. If the notice on its face requires documents from, say, 2015, but is dated 2026 and signed by an ordinary officer, the paragraph 20 time-bar bites. In Perring v HMRC [2021] UKFTT 110 (TC), the FTT held that a notice that failed the 6-year condition could not require earlier documents.

Deceased Persons (Paragraph 22)

Paragraph 22 prevents a Schedule 36 notice being given to check the tax position of a person who died more than 4 years ago. If you are an executor being asked about a relative's affairs, diary the date of death carefully.

Auditors And Tax Advisers (Paragraphs 24-26)

Paragraph 24 protects auditors from notices requiring material created for their audit function. Paragraph 25 protects "relevant communications" between a tax adviser and their client (or between two advisers acting for the same client) where the dominant purpose was giving or receiving tax advice.

These protections are subject to paragraph 26 carve-outs: material prepared by the adviser for onward delivery to HMRC, or material explaining information already given to HMRC, can still be required. If your accountant has received a third-party notice about you, paragraphs 24-26 are the relevant shield.

Possession Or Power (Paragraph 18)

A notice can only require documents in your "possession or power." "Power" extends beyond documents you physically hold to documents you can practically obtain—for example, by asking a third party who will comply. In Parissis v HMRC [2011] UKFTT 218 (TC), the FTT held that "power" is not limited to a legally enforceable right; practical access counts. HMRC bears the initial burden of showing a prima facie case, after which the burden shifts to you.

If a document does not exist, was never created, or was destroyed in the ordinary course before the notice arrived, you cannot be required to produce it. Reply in writing, specifically: "Item [n] is not in my possession or power because [the document was never created / was destroyed on [date] / was never held in this form]." A clear written answer to each item protects you; silence looks like non-compliance and attracts penalties.

Statutory Records: The Appeal Trap

This is the most important restriction to understand, because the protection runs the wrong way. Statutory records—records you are legally required to keep under the Taxes Acts or another tax enactment—are carved out of your appeal rights entirely. You cannot appeal the part of a notice that requires statutory records.

Paragraph 62 defines the term. For a self-employed person, statutory records include the records needed to make a correct tax return: invoices, receipts, bank statements used for business, till rolls, stock records, mileage logs. For a company, they include the statutory accounting records under the Companies Acts.

The definition reaches further than many taxpayers expect:

  • In Beckwith v HMRC [2012] UKFTT 181 (TC), a sole-trader carpenter used a personal bank account for business payments. The FTT held the personal bank statements were business records for Schedule 36 purposes. Mixing personal and business use of an account makes the statements fair game.
  • In Joshy Mathew v HMRC [2015] UKFTT 139 (TC), the FTT held that a self-employed taxpayer's bank statements were statutory records under paragraph 62, so there was no right of appeal.
  • Perring (above) narrowed the edges: for CGT, statutory records include purchase price, sale price, and deductible expenses; for a property rental business, receipts and expenses. Personal bank statements counted only to the extent the account was used for business.

If the notice asks for business invoices, business bank statements, till rolls, or equivalent records for a current or recent tax year, the right-of-appeal door is closed on those items. Your options are to comply, negotiate the timing, or refuse and face penalties.

Is What They Are Asking For "Reasonably Required"?

The gateway condition for every Schedule 36 notice is that the information or documents are "reasonably required" for the stated purpose. This is a substantive limit, not a rubber stamp.

Four principles emerge from the cases:

  • No fishing expeditions. There must be a rational connection between the information sought and the underlying purpose. Kotton v FTT (Tax Chamber) [2019] EWHC 1327 (Admin) held that the tribunal need only be satisfied of that connection at the approval stage, not examine the entire investigation in detail.
  • Purpose-specific. HMRC's request must be "genuinely directed to the purpose for which the notice may be given" (Simler J in Derrin, quoted approvingly in Avonside Roofing Ltd v HMRC [2021] UKFTT 158 (TC)). In Avonside the FTT set aside a notice because the officer's real concern was the implementation of tax planning, not the return itself.
  • Proportionality is built into "reasonably required". In Gold Nuts Ltd & Ors v HMRC [2017] UKFTT 84 (TC), Judge Redston held that "reasonably required" incorporates an obligation to consider whether each requested item is proportionate—but that assessment is made item by item, not across the notice as a whole.
  • Facts, not opinions. HMRC's own guidance at CH23240 confirms that an information notice can require facts, not opinions or speculation.

The burden of proof is not fully settled. Cliftonville Consultancy Ltd v HMRC [2018] UKFTT 231 (TC) held HMRC bears the burden of showing information is reasonably required, while the taxpayer bears the burden on statutory-records and Part 4 restriction claims. Perring followed that. Joshy Mathew had gone the other way on "reasonably required," and no Upper Tribunal ruling can resolve it because paragraph 32(5) makes FTT decisions final. In practice Cliftonville is the working consensus.

In Metropolitan International Schools Ltd v HMRC [2021] UKFTT 438 (TC), the FTT applied Gold Nuts and Avonside and varied parts of the notice that were not reasonably required. That is the realistic outcome to aim for in most notice appeals—narrowing the notice, not setting it aside wholesale.

Compliance Mechanics

Paragraph 7 requires you to comply within the period, and in the form, "reasonably specified or described in the notice." There is no statutory minimum—Schedule 36 does not fix 30 days, 14 days, or any other period. HMRC's standard practice, reflected in its CC/FS2 factsheet, is to allow 30 days, and shorter periods risk being argued unreasonable on appeal.

Documents must be produced at a place agreed or reasonably specified by HMRC—but not at a dwelling used solely as a private residence (paragraph 7(3)). You can generally produce copies rather than originals, unless the notice or a later written request specifies originals (paragraph 8).

If you cannot meet the deadline, ask HMRC in writing for more time before it passes. HMRC has no statutory power to formally "extend" the notice deadline—this was the critical holding in Baxendale-Walker below—but it can and routinely does waive penalties for non-compliance where there is a reasonable excuse or the officer accepts the delay was unavoidable. A verbal "fine, take another month" does not protect you. Get the officer's position in writing and keep the email.

The Penalty Ladder

Schedule 36 backs its notices with an escalating penalty structure. The higher rungs matter less often than the lower ones—but when they do, they matter a lot.

Rung 1: The Initial Penalty (Paragraph 39)

Paragraph 39 imposes a fixed penalty of £300 for failing to comply with an information notice, or deliberately obstructing a tribunal-approved inspection. Concealing or destroying documents you were required to produce is treated as a failure to comply (paragraphs 42-43).

Rung 2: Daily Penalties (Paragraph 40)

Paragraph 40 adds up to £60 for each day the failure continues after the paragraph 39 penalty is imposed. The clock runs from the date HMRC assesses the initial penalty, not from the date of the original notice.

Rung 3: Increased Daily Penalties (Paragraph 49A)

If the failure continues for 30 days after paragraph 40 has been engaged, HMRC can apply to the FTT under paragraph 49A for an increased daily penalty of up to £1,000 per day. The tribunal decides the commencement day and the maximum amount. Paragraph 49B requires you to be notified.

These applications are rare, but they are the lever HMRC pulls when standard daily penalties have failed to secure compliance. Paragraph 47 excludes paragraph 49A from the penalty appeal right, so you cannot appeal the increased amount itself in the usual way.

This is the one to take seriously. Paragraph 50 allows the Upper Tribunal—not the FTT—to impose an additional penalty in whatever amount it decides, where: you are liable to a paragraph 39 penalty; the failure continues; an HMRC officer has reason to believe the tax paid (or likely to be paid) is significantly less than it would have been but for the failure; HMRC applies within 12 months of the "relevant date" (the date you became liable to the paragraph 39 penalty); and the UT decides a penalty is appropriate.

There is no fixed ceiling. The amount is set by the UT having regard to the tax unpaid or likely unpaid. This is the penalty commentators mean when they say the cap is "up to 100% of the tax at stake"—though the UT's discretion is in principle broader.

The 12-month deadline is enforceable. In Baxendale-Walker v HMRC [2024] UKUT 154 (TCC), HMRC applied for a tax-related penalty of £14,031,851.01. The Upper Tribunal struck out the application on a procedural ground: HMRC had purported to extend the compliance deadline by a year, but paragraph 44 only allows HMRC to waive penalties, not to extend statutory time limits. The "relevant date" for the 12-month clock ran from the original deadline. HMRC's application was 13 days late—and a potential £14m penalty fell at the first procedural hurdle.

Baxendale-Walker shows the safeguards bite. If you receive a paragraph 50 application, check the dates: work out exactly when the paragraph 39 liability arose and count 12 months forward. Paragraph 50 applications go directly to the Upper Tribunal—our Upper Tribunal appeal guide covers the general UT procedure, though paragraph 50 is a distinctive subset.

The Reasonable Excuse Defence

Paragraph 45 provides a reasonable excuse defence to paragraph 39 and 40 penalties, applying the four-step Perrin framework. Paragraph 45(2) repeats the familiar carve-outs: insufficiency of funds is not normally a reasonable excuse, reliance on another is not an excuse unless you took reasonable care, and an excuse that has ceased continues only while you remedy the failure without unreasonable delay. See our reasonable excuse guide.

Reasonable excuse does not apply to the notice itself—only to penalties. If you think the notice is invalid or too broad, you must use the paragraph 29 appeal route.

Appealing The Penalties

Penalty appeals are separate from notice appeals. Under paragraph 47, you can appeal against HMRC's decision that a paragraph 39 or 40 penalty is payable, and against the amount. The window is 30 days from the date of the penalty notification, and the appeal must be in writing and state grounds (paragraph 48).

The mechanics follow the standard route—write to HMRC first, the statutory review offer applies (paragraph 48 imports Part 5 TMA 1970), then notify the appeal to the tribunal. See our guide to appealing to the tax tribunal, HMRC internal review guide (45 days statutory review window), and understanding HMRC appeal rights.

Past the 30 days deadline, a late appeal application is possible, but the Martland three-stage test makes clear that the window is short and the bar is real.

Third-Party Notices And Financial Institution Notices

If someone else has received a Schedule 36 notice about you—your accountant, your bank, your employer—the picture shifts. You are not the primary recipient, but you are still affected.

Third-party notices (paragraph 2). You will normally receive a copy plus a "summary of reasons" under paragraph 3(3)(e), unless the tribunal has disapplied the naming requirement under paragraph 3(5). The recipient has appeal rights, but Derrin confirmed that third-party recipients are not entitled to a detailed explanation of the investigation—the summary of reasons is for the named taxpayer.

Financial institution notices (paragraph 4A). No tribunal approval is required. Unless the tribunal has disapplied it, you are given a copy plus a summary of reasons. The institution can argue the request is "unduly onerous," but you have no direct appeal right against a FIN.

Overseas recipients. Schedule 36 is not limited by your place of residence. In Jimenez, the Court of Appeal held that a UK taxpayer resident in Dubai was within reach of a paragraph 1 notice—what matters is UK taxpayer status, not where you live. If HMRC thinks you may owe UK tax, the notice can follow you.

A Practical Response Plan

  1. Identify the paragraph. Paragraph 1 (taxpayer), paragraph 2 (third-party), paragraph 4A (financial institution), or paragraph 5 (unknown identity)? Your appeal rights depend on this.

  2. Check whether the tribunal approved it. Look for the paragraph 6(3) statement on the face of the notice. If yes, you cannot appeal—judicial review is the only route.

  3. Diary the 30 days deadline from the date on the notice. An appeal must reach HMRC within that window, in writing, stating grounds.

  4. Separate statutory records from everything else. Business bank statements, invoices, rent receipts, till rolls, CGT purchase and sale documents are statutory records and cannot be appealed. Focus appeal energy on what is not.

  5. Check for Part 4 restrictions. LPP (paragraph 23)? Older than 6 years with only an ordinary officer's signature (paragraph 20)? A personal record (paragraph 19)? A "relevant communication" held by a tax adviser (paragraph 25)? Not in your possession or power (paragraph 18)?

  6. Ask whether each item is "reasonably required" for the stated purpose. Is the link rational? Is the scope proportionate?

  7. Decide your strategy. Most readers will comply in full. Some will comply partially and appeal the rest. A few—where there is a strong statutory-records misclassification, privilege issue, or 6-year problem—will appeal the notice in full. Whatever you choose, put every ground into a single appeal (the PML one-shot rule).

  8. If you need more time, ask in writing before the deadline. HMRC cannot formally extend the statutory deadline (Baxendale-Walker) but it can and does waive penalties for reasonable delay. Keep the reply on file.

  9. Do not ignore it. The penalty ladder escalates. Acknowledging receipt and opening a dialogue is the minimum, even if you dispute the notice.

  10. Consider professional advice for notices tied to significant assessments or complex privilege questions. An adviser's early involvement preserves the reasonable-care defence against later inaccuracy penalties.

Schedule 36 sits at the front end of most substantive HMRC disputes. A notice is often the opening shot; you may later be dealing with a closure notice, a discovery assessment, a Schedule 24 inaccuracy penalty, or a VAT assessment. How you respond now—what you disclose, what you withhold, what you appeal—shapes the rest of the dispute. See our tax dispute timeline for where information notices sit in the broader map.

A final word on postponement. Schedule 36 notices are about information, not disputed tax—so the usual section 55 TMA postponement does not arise at the notice stage. It becomes relevant later, if the enquiry produces an assessment.

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This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.

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