Finance Act 2021 s.127: HMRC's tax-debt-collection limb on Schedule 36 (UK 2026)

For thirteen years, Schedule 36 of the Finance Act 2008 had a single underlying purpose: "checking the tax position" of a taxpayer. Every information notice — taxpayer notice, third-party notice, unknown-taxpayer notice — had to be grounded in an open or anticipated enquiry into how much tax was due.

Section 127 of the Finance Act 2021 quietly changed that. Schedule 36's four information-notice routes were extended to a second purpose: "or for the purpose of collecting a tax debt of the taxpayer". The disjunctive matters. HMRC no longer needs an open enquiry to demand information under Schedule 36; an established tax debt — including a Stamp Duty Land Tax (SDLT) debt, an Annual Tax on Enveloped Dwellings (ATED) debt, or a Capital Gains Tax on residential property debt — is sufficient grounding on its own.

This is the procedural background to a growing number of post-enquiry information demands. This piece walks the statute verbatim, maps the change onto each of the four notice routes, and flags the appeal-route implications for recipients.

The scale anchor (Land Registry data)

Schedule 36's tax-debt limb matters most where tax stakes are highest. Pulling the 2025 calendar year from HM Land Registry pp-complete via Homecost's database:

Source: HM Land Registry Price Paid Data, queried 29 May 2026.

Every one of those 848,775 transactions sits inside an SDLT regime, and the 153,233 high-value transactions also sit inside ATED's enveloped-dwelling perimeter. Where the tax owed is large and the taxpayer has gone quiet, the s.127 extension is the route HMRC now uses to flush out asset and income information from third parties.

What section 127 actually says

Section 127 of FA 2021 is short — eight subsections — but each one performs a precise surgical insert into Schedule 36. The amendments are quoted verbatim below from legislation.gov.uk.

127(1) — scope

"Schedule 36 to FA 2008 (information and inspection powers) is amended as follows."

127(2) — paragraph 1 (taxpayer notices)

"In paragraph 1(1) (taxpayer notices), at the end insert 'or for the purpose of collecting a tax debt of the taxpayer'."

Paragraph 1 is the everyday Schedule 36 notice — issued to the taxpayer themselves. Pre-2021, the officer had to be checking the taxpayer's tax position. Post-2021, the officer can also issue the same notice "for the purpose of collecting a tax debt of the taxpayer".

127(3) — paragraph 2 (third-party notices)

"In paragraph 2(1) (third party notices), at the end insert 'or for the purpose of collecting a tax debt of the taxpayer'."

Paragraph 2 reaches third parties — banks, conveyancers, accountants, estate agents — who hold information about a named taxpayer. The mechanics are walked through in our companion piece on paragraph 2 third-party notices. Post-2021, the same notice can be issued to recover an established debt; the tribunal-approval gate in paragraph 3 still applies in the same way.

127(4) — paragraph 5 (unknown-taxpayer notices)

"In paragraph 5(2) (persons whose identities are not known), after 'tax position of' insert 'or for the purpose of collecting a tax debt of'."

Paragraph 5 is the unknown-taxpayer route — the officer knows information exists about a class of taxpayers (e.g. all customers of a particular short-let platform) but does not know who those taxpayers are. Walk-through: paragraph 5 unknown-taxpayer notices. The 2021 amendment widens this from "checking tax position" to also "collecting a tax debt".

127(5) — paragraph 5A (identity-ascertainment notices)

"In paragraph 5A (persons whose identity can be ascertained)—

(a) in sub-paragraph (2), at the end insert 'or for the purpose of collecting a tax debt of the taxpayer', and

(b) in sub-paragraph (7), after 'tax position of', in both places, insert ', or for the purpose of collecting a tax debt of,'."

Paragraph 5A — inserted into Schedule 36 by section 224 of the Finance Act 2012 — is the identity-ascertainment route used against letting agents and short-let platforms. Pre-2021 it served only "tax position" enquiries. Post-2021 it also serves debt collection. Sub-paragraph (7) is the bulk-application provision, and section 127(5)(b) extends that bulk route as well.

127(6) — new paragraph 63A (definition of "collecting a tax debt")

"After paragraph 63 insert—

63A (1) In this Schedule a reference to collecting a tax debt of a person is a reference to taking any steps for, or in connection with, the recovery of—

(a) an amount of tax due from the person, or

(b) any other amount due from the person in connection with any tax.

(2) It does not matter whether or not another person is, or has been, at any time liable to pay the tax or other amount."

Two points matter on the face of paragraph 63A.

First, the words "any steps for, or in connection with, the recovery of" are deliberately wide. The amount does not have to be tax owed under an assessment — paragraph 63A(1)(b) reaches "any other amount due ... in connection with any tax", which captures Schedule 24 inaccuracy penalties (FA 2007), Schedule 36 information-notice penalties (FA 2008), Schedule 55 late-filing penalties (FA 2009) and the rest of the penalty stack.

Second, the words in paragraph 63A(2) — "It does not matter whether or not another person is, or has been, at any time liable to pay" — cover joint-and-several liability scenarios (joint SDLT purchasers, partnership returns, transferred trustee liability) and cases where the original taxpayer has become insolvent or unreachable and HMRC is pursuing a derivative liability.

127(7) — new paragraph 63B (foreign tax)

"After paragraph 63A (inserted by subsection (6)) insert—

63B Where this Schedule applies for the purpose of collecting a tax debt of a person, 'relevant foreign tax' is to be taken to include (in addition to what is mentioned in paragraph 63(4)) any tax or duty which is covered by the provisions for the exchange of information under Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures (as it had effect immediately before IP completion day)."

Paragraph 63B is the cross-border collection limb. It rolls the EU Mutual Assistance Recovery Directive (MARD) wording into Schedule 36's definition of "relevant foreign tax" — but only for the debt-collection limb, and only as MARD stood at the end of the EU exit implementation period. In practice this allows HMRC, when collecting on behalf of an EU member state under existing reciprocal arrangements, to ground a Schedule 36 notice on the foreign-tax debt itself.

127(8) — retrospective effect

"The amendments made by this section have effect for the purpose of collecting a tax debt of a person whenever arising."

This is the load-bearing operative clause. "Whenever arising" means the debt does not need to post-date the 2021 amendment. A 2015 SDLT discovery assessment that crystallised as an unpaid debt in 2017 can be the grounding for a Schedule 36 notice issued in 2026. The 2021 extension reaches back across the entire active tail of unpaid tax debts.

How the test now reads on each notice route

The amendments are short but the cumulative effect is to change the test the recipient — taxpayer, third party, or unknown-class member — has to consider. The test is now disjunctive rather than singular.

The "reasonably required" qualifier in the underlying paragraphs is unchanged. So is the tribunal-approval gate in paragraph 3 (third-party route), paragraph 5(3) (unknown-taxpayer route) and paragraph 5A(3) (identity-ascertainment route). What changed is the underlying purpose HMRC is allowed to assert when meeting that gate.

The appeal-route implications

The biggest procedural consequence sits inside paragraph 30. A third-party recipient can appeal a Schedule 36 notice on a single ground: that the notice is "unduly onerous". Paragraph 30(3) shuts the door if the notice was tribunal-approved; paragraph 30(2) shuts the door for statutory records. Otherwise the recipient has a 30-day window to file an appeal in writing with the issuing officer, stating grounds.

The "unduly onerous" test itself — set out by HMRC at CH24420 — turns on whether "the burden on the person receiving the notice is disproportionately greater than the benefit expected to be gained from having the information or documents in question." That benefit-side calculus shifts in a debt-collection notice. Where the "benefit" is no longer "checking" an open question but "collecting" a known sum, the proportionality calibration may run differently in the tribunal's hands. There is no Upper Tribunal route on this — paragraph 32(5) makes the First-tier Tribunal's decision final, with judicial review the only remaining challenge.

A separate practical point: the paragraph 4 copy-to-taxpayer requirement for paragraph 2 third-party notices is unchanged by section 127. If the underlying purpose is debt collection, the taxpayer still receives a copy of any third-party notice and the reasons for it, unless the tribunal disapplies that requirement on a paragraph 3(4) application.

Schedule 36 penalties still apply on the debt-collection limb

Failure to comply with a Schedule 36 notice — whether issued for tax-position checking or for debt collection — exposes the recipient to the initial £300 penalty under paragraph 39, daily penalties of up to £60 under paragraph 40, the alternative regime under paragraph 49A, and the Upper-Tribunal-imposed tax-related penalty under paragraph 50. The penalty regime is medium-blind: it does not soften because the underlying purpose is debt rather than enquiry. Background on the penalty stack: Schedule 36 information notice penalties.

What this means in an SDLT context

Three patterns are visible in the data on the Homecost side:

Pattern 1 — derivative liability after a discovery assessment. Where a 2015–2018 SDLT discovery assessment has crystallised as an unpaid debt and the original taxpayer (or the conveyancing firm) is no longer responding, HMRC can now use paragraph 2 to issue a third-party notice to a successor entity, a bank, or another professional — grounded in the debt, not in any open enquiry.

Pattern 2 — ATED debts on enveloped dwellings. ATED applies to UK dwellings worth over £500,000 held by a non-natural person (typically a corporate envelope). With 153,233 residential transactions ≥ £500,000 in 2025 alone, the ATED enforcement perimeter has expanded steadily. Where ATED returns are missing and assessments have issued, paragraph 5A is now available to identify directors and beneficial owners for the debt-collection limb.

Pattern 3 — letting-platform let-property campaigns. Paragraph 5A has long been the bulk-data route against short-let platforms and letting agents for the let-property campaign. The 2021 amendment formally extends it to debt collection — useful where assessment has issued and identification of the underlying landlord is needed for recovery, not just for the original enquiry.

If you are pricing the SDLT exposure on a current purchase, the stamp-duty-calculator walks the standard slabs (0% to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m, 12% above).

When the notice arrives: a procedural checklist

If you receive a Schedule 36 notice that cites the debt-collection limb:

1. Identify which paragraph it is issued under. Paragraph 1 (taxpayer), paragraph 2 (third-party, with paragraph 4 copy), paragraph 5 (unknown-taxpayer, tribunal-approved), or paragraph 5A (identity-ascertainment, tribunal-approved).
2. Identify the underlying debt. Section 127 requires the underlying purpose to be the collection of a tax debt of a named taxpayer (or class, for paragraphs 5 and 5A). Ask the officer in writing what the debt is, when it was assessed, and which assessment it sits under.
3. Check whether the items demanded are statutory records. Paragraph 30(2) shuts the appeal door for statutory records — they have to be produced regardless of "unduly onerous" arguments.
4. Check whether the notice was tribunal-approved. Paragraph 30(3) shuts the appeal door for tribunal-approved notices; the only remaining route is judicial review of the approval.
5. Note the 30-day appeal deadline. Paragraph 32(1) runs the clock from the date the notice is given (typically the date of posting), not the date it is received. The appeal goes to the issuing officer, in writing, with the grounds stated.

Background on the wider compliance check that the notice sits inside: SDLT enquiry windows and HMRC challenge letters.

Source documents

Land Registry transaction counts in this piece are from Homecost's database (29 May 2026 query). For more on the SDLT cluster, browse the cost-intelligence category.

This is general information about a piece of tax procedure, not advice. The application to any specific situation — including whether a notice you have received is properly issued, what the items demanded actually cover, and whether an appeal is open to you — depends on the facts. Speak to a qualified tax adviser or solicitor before acting on anything in this piece.