HMRC has always had the ability to request financial information when checking someone’s tax position. But since 2021, it has gained a power that many taxpayers are still unaware of.
Under the Finance Act 2021, HMRC can request information directly from certain financial institutions without the taxpayer’s prior approval. For investors and higher earners, it’s a useful reminder that the figures reported on a tax return should line up with the records held by financial firms.
The Power HMRC Gained in 2021
The change came with the introduction of Financial Institution Notices, commonly abbreviated as FINs.
A Financial Institution Notice allows HMRC to request information from a financial firm about a taxpayer’s accounts and financial activity. Unlike some earlier information requests, HMRC does not need approval from a tax tribunal before issuing one. HMRC can use this power when checking a taxpayer’s position or when gathering information to help collect a tax debt.
The notice must name the taxpayer involved, explain the information required and specify the time period being reviewed. HMRC must normally send the taxpayer a copy of the notice and explain why the information is being requested, although a tribunal can allow HMRC to withhold that notification in certain circumstances. HMRC must also have reasonable grounds for believing the information is needed to check a tax position – in other words, no fishing-expeditions.
Who HMRC Can Request Information From
A FIN can be sent to banks, building societies, investment platforms, insurers and other financial institutions that fall within HMRC’s rules.
For investors, this often means that information about savings, dividends, interest and investment transactions already sits within systems that HMRC can legally request access to.
What Information Can Be Requested
The data requested through a Financial Institution Notice usually relates to financial activity connected to a taxpayer.
Typical examples include:
- Account balances
- Transaction histories
- Interest payments
- Dividend income
- Details of account holders or beneficial owners
These records allow HMRC to compare financial data with the figures reported on tax returns.
Much of this information already exists in structured records held by financial providers.
Safeguards Still Apply
Although tribunal approval is not required, the power is not unlimited.
HMRC must show that the information requested is reasonably required to check a tax position. The request must be proportionate and authorised internally by a senior HMRC officer. Financial firms are not required to provide legally privileged material.
These conditions are designed to prevent broad or speculative requests.
In practice, the power is used in a relatively small number of cases. HMRC issued 1,307 Financial Institution Notices in the 2024/25 tax year, compared with roughly 316,000 compliance checks overall. Most taxpayers will never encounter one directly.
Why This Matters for Investors
For people with several accounts, investment platforms, or income sources, good record-keeping becomes more important.
Investment income, interest and capital gains often arise across different providers. If the figures reported on a tax return differ from the records held by those firms, the discrepancy can attract attention during routine checks.
Keeping organised records of investment activity and taxable income helps ensure tax reporting remains accurate. For many investors, that means carefully reviewing statements and ensuring all relevant income and gains are included when completing returns.
Working with an adviser can make tax reporting far easier, especially if you hold investments across multiple providers. But good records still matter. Ultimate responsibility for accurate tax reporting remains with the taxpayer.
If you would like to review how your investments fit into your wider tax position, you can speak with the Cedar House team by calling 020 8366 4400 or emailing enquiries@cedarhfs.co.uk.