Can HMRC check your private bank account? Yes, and it could become normal!

Can HMRC check your personal bank account? It’s a question many people ask, worried that the taxman can freely browse their financial data.

Until June 2021, the answer to the question was a qualified ‘yes’. If HMRC is investigating a taxpayer, the power to issue a ‘third party notice’ to request information from banks and other financial institutions has been there for some time. It can also issue these notices to a taxpayer’s lawyers, accountants and estate agents.

However, this doesn’t mean that the taxman can issue these notices willy-nilly. HMRC not only has to prove that information is ‘reasonably required’, but the taxpayer or a tax tribunal must give approval.

Financial Instistution Notices (FINS)

However as from June 2021, HMRC are now able to issue a new ‘Financial Institution Notice’, requiring financial institutions to provide information about a taxpayer. For this, the consent of the taxpayer or independent tribunal approval is no longer necessary. One of the main reasons that this was changed according to HMRC was that obtaining information from some overseas banks was taking too long.

What other data are HMRC able to access?

Other kinds of third-party data HMRC wants to access include:

• Bank and building society interest (building on the information already available)
• Dividends from UK companies and distributions from authorised unit trusts
• Distributions from UK and overseas open-ended investment companies
• Pension contributions
• Gift aid payments to charities
• Data from investment and wealth managers including information about chargeable gains, excess reportable income, interest, dividends and equalisation payments
• Insurance bond chargeable events
• Royalties

As you can see, the question “Can HMRC check your private bank account?” may soon only cover part of the story!

What can I do?

It would be wise to make sure your financial accounts are in good condition over the coming months. Importantly, self-employed people must ensure they have a separate business bank account and personal bank account. We can also help you make sure that your accounts are well managed and can advise you on cloud accounting software that helps achieve this. If you are a THP client, get in touch with your account manager for help.