Section 97 and Schedule 49: Powers to Obtain Contact Details for Debtors
Summary
1.Section 97 and Schedule 49 provide that HM Revenue & Customs (HMRC) may issue notices requiring third parties to provide contact details for those in debt to HMRC.
Details of the Schedule
2.Paragraph 1 provides that a number of conditions must be satisfied before HMRC can issue a formal notice. The first is that a person owes a sum to HMRC, and HMRC reasonably requires up-to-date contact details to be able to collect the debt. “Contact details” mean an address or other information about how the debtor may be contacted. The debt must arise under or by virtue of an enactment, or under a contract settlement. “Under or by virtue of an enactment” brings in those debts arising from taxes, duties etc imposed by statute. “Contract settlements” are defined in paragraph 8 and are contractual agreements made in connection with a person’s liability, usually as the result of an enquiry covering a number of years.
3.Second, an officer of Revenue and Customs must have reasonable grounds to believe that the third party has contact details that differ from the latest held by HMRC.
4.The third condition defines who the third party can be and so prevents HMRC formally requiring information from neighbours or relatives who have no business relationship with the debtor.
5.The fourth condition prevents HMRC formally requiring information from charities that acquire the contact details in the course of providing advice without charge.
6.Paragraph 2 provides that an officer of Revenue and Customs may serve a notice on a third party requiring the production of contact details. The requirement for a written notice does not preclude earlier requests, whether orally or otherwise. The notice must name the debtor, and in practice HMRC would provide sufficient other information to identify the debtor including the latest address it holds.
7.Paragraph 3 provides that where a third party is required to provide contact details, it must be done within the period, at the time, and in the means and format reasonably specified in the notice. The notice does not need to specify means or form but in practice a response may be in writing, by telephone or otherwise. Confirmation that no different address is held from that which HMRC has provided will satisfy the notice.
8.Paragraph 5 provides that a person who fails to comply with a notice is liable to a penalty of £300. The procedures for penalties are the same as those for the information power to check a person’s tax position under Schedule 36 to the Finance Act (FA) 2008.
9.Paragraph 6 provides that the Treasury may make regulations to alter the penalty in paragraph 5 where there is a change in the value of money.
Background Note
10.HMRC makes every effort to ensure that the address information it holds is accurate and up-to-date. It uses a range of techniques to trace tax debtors who go missing, including the extensive use of commercial databases. However, there remain some who cannot be traced and in 2007 the Department wrote off £300 million for this reason.
11.This section and Schedule allow HMRC to require relevant third parties to disclose address and contact details of missing debtors, where those details are reasonably required to collect what is owed. Relevant third parties are those who HMRC has reason to believe have more recent contact details than it holds. They are explicitly restricted to companies, local authorities and local authority associations and those who HMRC reasonably believes to have, or have had, a business relationship with the debtor.
12.This measure was the subject of initial consultation in June 2007 and further consultation in December 2008 (Payments, Repayments and Debt: the Next Stage). Draft legislation was published for consultation in January 2009, and a response document together with a final Impact Assessment was published in April 2009.
