31 March 2021 
Andrea Marshall, Tax Specialist
On a call raised with HMRC last week, the topic of requests for information by HMRC came up. On the call, HMRC advised that they may start to issue Sch 36 notices when agreeing deadline extensions with HEI's, where HMRC has previously requested information.
The important point to note is that if a Sch 36 notice is issued and the taxpayer does not comply with it within the deadline, HMRC may issue a monetary penalty - there is an inital penalty of £300 and after this, daily penalties of £60 (in certain rarer circumstances increasing to £1,000) could be applied. Sch 36 notices can be issued for a range of taxes including PAYE and NIC, corporation tax and VAT.
Hopefully the instances of Sch 36 notices being issued and penalties being raised will be rare, but please advise Andrea or Julia if they are issued to your HEI.
We have asked for clarification from HMRC HE team on this issue and the following note been provided:
Information Requests from HMRC
HMRC is aware that finance and tax teams within all organisations have periods within the year where they are busier than usual. HMRC tax compliance activity may take place within these busy periods which puts additional pressure on finance and tax teams. A request from HMRC to provide information or documents to check a tax position would typically include a deadline of 30 days to provide this information.
Where an organisation is unable to meet this deadline and there are reasonable grounds, HMRC will consider a request for a suitable extension period, this request would not ordinarily be refused. When considering an extension HMRC will take into account the volume and complexity of the information requested as well as any factors outside the control of the organisation. When such an agreement is reached HMRC may formalise this agreed deadline and a schedule 36 notice will be issued. This is with respect to the information powers set out in schedule 36 of the Finance Act 2008. The Officer who agrees the extension would explain that a schedule 36 notice will be issued to formalise the request. This is consistent with the approach taken with compliance checks across other areas of HMRC.
In the event that an organisation is unable to meet the extended deadline as set out in the schedule 36 notice, they should contact HMRC at the earliest opportunity. Penalties are not automatically issued but would be considered on a case by case basis. Where an organisation is able to demonstrate that they reasonably require further additional time, this will be considered. However, if the deadline is reached and information/documents have not been fully provided and there has been no contact or explanation with regards to this, then a penalty may be issued.
Schedule 36 notices and penalties may also be used where there has been no response to an initial request. This is not something that is typically experienced in compliance checks with the Higher and Further Education Sector and HMRC will attempt to make contact by letter, email and/or phone wherever possible before this action is taken.
Covid and Information Requests
HMRC understands that during the ongoing Covid-19 pandemic many organisations are facing additional pressures and challenges that may affect response times to HMRC. These include delays in receiving paper post, increased staff absences and lack of access to records. Whilst agreed extensions may still be formalised through schedule 36 notices HMRC will take a pragmatic approach with regards to the additional time needed and any further requests for extensions. Where a deadline is missed and there are mitigating factors due to Covid-19 HMRC will take these into account.
Further information on Schedule 36 FA2008 Information and Inspection Powers can be found within the HMRC Compliance Handbook section CH20150.
