Dear HM Revenue and Customs,

HMRC has made requests for information under Schedule 36 of the Finance Act 2008. These are targeted at suspected users of contractor loan style / disguised remuneration schemes.

1. THE FIRST LETTER – informal ‘fishing letter’ with schedule

A first letter, designed to look like a formal information request (including schedule) is sent. However, this is misleading as it not issued under any formal powers.

The body of the letter is as follows:

“We’re writing to you about your employment arrangements with [umbrella name].

You may not have realised this, but these arrangements could be tax avoidance. When you signed up to them, the possible tax consequences may not have been clear to you. You can find out more about this in the section ‘about tax avoidance’.

…

Why we’re writing to you

We are writing to let you know that we’re checking your tax position [1] to see if your employment arrangements with [X] involve tax avoidance. To help us with our check, we need [2] you to send us information and documents relating to your employment arrangements with them.

What you need [3] to do now

The enclosed schedule shows the information and documents that you need to send us.Please send them to us by [a 15 day deadline] [4]

Attached to this letter is also a formal looking schedule."

Of course, as set out above, there is no formal requirement to respond. This is despite being couched in the terms of a formal enquiry at [1] “Checking your tax position”. For these clients, there is no tax return to check and in many cases the tax year has not even finished!

The letter misrepresents the position at [2] and [3] by saying the taxpayer “needs” to respond. In other words, a response is mandatory. It is not mandatory.

The 15 day deadline is half the usual 30 day deadline. Again, the implication is that this is done to force the recipient into handing over information in a panic.

The letter has the reference CompC1NOS on the footer.

2. THE SECOND LETTER – formal Information Notice issued

Around 4-6 weeks later, a second letter issued under formal Schedule 36 powers is received by the taxpayer.

The letter is as follows:

“Notice to provide information and produce documents

This letter is an information notice. It legally requires you to give us the information and / or documents we ask for…

We have sent a copy of this letter to your tax adviser [X]. [1]

Why I’m giving you this notice

…
We told you that we’re checking your tax position, to see if your employment arrangements involve tax avoidance.

We have not received any of the items we asked you to send us.

…

What you need to send me

I need you to send me the items shown on the enclosed schedule [3]

You need to send these to me by [date] [2]"

[1] It is noteworthy that whilst this document was sent to the tax adviser, the first letter was not.

[2] This time the return date is 30 days.

[3] The example letter I am looking at was sent in February 2023. It was requesting information for the 2022/23 tax year which had not even finished at the date of the information request.

This included private bank statements up to January 2023 which is rather extraordinary. In some cases, the request was for 18 months of bank statements.

As such, it does beg the question what tax position was being checked here!?

The letter has the reference CompC5NOS on the footer.

3. THE CAMPAIGN ITSELF

In statements provided by HMRC members of staff I have been told that these letters are issued by Campaigns & Projects (“C&P”).

I understand that C&P is a department which “works in partnership with Counter Avoidance (“C-A”) and is responsible for carrying out various C-A requests.”

I understand that this relevant project is called the Early Intervention Project. It is a project within C-A responsible for investigating suspected users of tax avoidance arrangements.

The relevant letters were mainly signed off by Fraser Jackson (or simply C&P projects) was assistant director at the time and so the letter was signed off in his name. It is understood that, prior to that, Ian Brown was also signatory to these letters. The current signatory is Michael Conroy.

As such, by ‘this project’ I mean the CA Keeping Customers Informed project, the Early Intervention Project or by whatever other name this project goes by internally.

4. MY FOI REQUEST

(A) General information required

I request that you provide me with all internal correspondence (Including emails) and other information held by HMRC in relation to this project:

• Between C-A and C&P discussing the particular project including, but not limited to, its aims, how it would be carried out and why they decided to use Schedule 36 information notices;
• Any discussions around why HMRC decided to use this route to gain information about employment payments rather than undertaking a PAYE compliance review into the employer;
• Any discussions around whether the fact that they had not submitted a tax return (albeit because the filing date had not yet passed) meant the taxpayer was not protected by paragraph 21 of Schedule 36 of Finance Act 2008;
• Any correspondence with the Behavioural Insights Team regarding this campaign;
• Correspondence to or from Mr Fraser Jackson, HMRC in relation to this project;
• Correspondence to or from Mr Ian Brown, HMRC in relation to this project;
• Correspndence to or from Mr Michael Conroy, HMRC in relation to this project;
• Correspondence to or from Ms Claire Stormonth, HMRC in relation to this project

By ‘this project’ I mean the CA Keeping Customers Informed project, the Early Intervention Project or by whatever other name this project goes by internally.

(B) Specific information

Where this information is not included in the above, I would like all correspondence and information held by HMRC that relates to:

The first letter

• Who designed this letter?
• Any internal correspondence around the design of this letter. Particularly related to whether any decisions were taken internally to design this letter such that it mimicked a statutory enquiry letter or the use of any other formal powers;
• Any input by the Behavioural Insights Team (“BIT”) on this letter. If BIT were involved then any briefing provided to them or terms of reference;
• Who took the decision to include a short return date rather than the usual 30 days? I would like you to provide any internal correspondence around the decision to provide a short return date;
• Internal discussions around the next steps where a taxpayer decides not to respond to this voluntary request for information.
• Any internal discussions around whether or not this letter should be sent to the taxpayers tax adviser or accountant.

The second letter (and schedule)

• Any internal discussions and documents around whether issuing a Schedule 36 notice in year, before the self-assessment filing date, was a valid and appropriate use of these statutory powers;
• Any input by the Behavioural Insights Team (“BIT”) on this letter. If BIT were involved then any briefing provided to them or terms of reference;
• Why did HMRC feel it appropriate, against the instructions its own Manuals, to ask for up to 18 months bank statements when there was no tax assessment to check these entries against;
• Internal discussions regarding how to respond to tax advisers appeals against these Schedule 36 Information Requests;
• Any discussions regarding the change of the return date back to 30 days for the second letter

I trust the above makes sense and look forward to your full response.

Yours faithfully

A Timothy

Dear Team, FOI,

Your response indicated that providing the information I asked for in my original request would exceed the cost limit.

I have therefore reduced my request in scope, as follows:

Please complete a search and provide all emails from and to the following individuals that include the keywords listed below (relevant keywords):

• Mr Fraser Jackson
• Mr Ian Brown
• Mr Michael Conroy
• Ms Claire Stormonth
• Behavioural Insights Team

Relevant keywords:

• CA Keeping Customers Informed
• Early Intervention Project
• Keeping Customers Informed
• CompC5NOS

The search need only cover the period from 6 April 2021 to 5 April 2023.

Yours sincerely,

Andrew Timothy

Dear Team, FOI,

I have further reduced my request in scope, as follows:

Please complete a search and provide all emails from and to the previously mentioned Mr Ian Brown that include the keywords listed below (relevant keywords):
Relevant keywords:

* CA Keeping Customers Informed
*Early Intervention Project
* Keeping Customers Informed
* CompC5NOS

The search need only cover the period from 6 April 2021 to 31 December 2022.”

Yours sincerely,

Andrew Timothy

Dear Team, FOI,

Thank you for your response.

However, it makes no sense. I do not want any personal information or information relating to any individual. As I am sure you well know, I am requesting information that relates to a formal HMRC campaign -namely the CA Keeping Customer Informed Campaign and its use of Sch 36 Information Notices'

I have named a specific individual because they are an identifiable member of the team that I am aware of. If I was to request the same information from any Senior Officer (which would be my preference) you would come back and say it was too wide ranging and there was too much information. Hence, I have narrowed it down as far as I can.

In light of this, please reconsider my request.

Yours sincerely,

Andrew Timothy