Under legislation included in the Finance Bill 2020/21 a new Financial Institution Notice (FIN) is to be used by HMRC to require financial institutions to provide relevant details about a specific taxpayer. Unlike the previous procedure the new notice will not need approval from an independent tribunal. HMRC will use the information obtained using the FIN to check the tax position of the taxpayer.

Safeguards for the taxpayer will be retained. The information requested must be reasonably required to check the tax position of a known taxpayer. In the case of international requests the information requested in the FIN must be relevant to the administration or collection of tax and before requesting the information the overseas jurisdiction must have exhausted all reasonable domestic routes for obtaining the information.

The FIN cannot be used to request documents subject to legal professional privilege. HMRC must inform the taxpayer of the reasons why the information is needed, except in cases where a tax tribunal has ruled that this condition does not apply. The decision to issue the FIN must be approved by an authorised officer of HMRC.

If penalties are imposed on a financial institution as a result of failure to comply with a FIN, the financial institution will be able to lodge an appeal against the penalties.

HMRC considers that the new process is necessary to shorten the time required to deal with international exchange of information requests and bring the UK into line with the latest international standards on tax transparency and exchange of tax information. Currently HMRC requires twelve months on average to obtain information under a notice, compared to the international target of six months, due to the need to obtain the approval of a tribunal.

HMRC will send an annual report to Parliament on its use of the FIN.