Schedule 36 paragraph 2 third party notices: what the conveyancer, bank or surveyor must hand over

When HMRC opens a check on a Stamp Duty Land Tax return, the first formal demand for information does not always land on the buyer's doormat. Under paragraph 2 of Schedule 36 to the Finance Act 2008, the demand can instead be served on the buyer's conveyancer, surveyor, mortgage lender or letting agent — and the procedural mechanics are very different from a paragraph 1 taxpayer notice. This piece walks through the statutory framework, the gating tests at paragraph 3, the copy-to-taxpayer rule at paragraph 4, the limited appeal route at paragraph 30, and where third-party notices fit in the wider SDLT compliance picture.

The statute, in plain English

Paragraph 2(1) of Schedule 36 reads (verbatim, abbreviated):

An officer of Revenue and Customs may by notice in writing require a person — (a) to provide information, or (b) to produce a document, if the information or document is reasonably required by the officer for the purpose of checking the tax position of another person whose identity is known to the officer ("the taxpayer") or for the purpose of collecting a tax debt of the taxpayer.

The italicised words from the tax-debt limb were inserted by section 127 of the Finance Act 2021. Before that, paragraph 2 only authorised information-gathering during a live tax check — not collection. The 2021 amendment widened the route considerably.

Two further sub-paragraphs complete the framing:

• Paragraph 2(2): a third party notice must name the taxpayer to whom it relates, unless the First-tier Tribunal has both approved the giving of the notice and disapplied the naming requirement under paragraph 3(5).
• Paragraph 2(3): defines "third party notice" as a notice given under this paragraph.

What the statute is doing is straightforward. Paragraph 1 lets HMRC demand information directly from the person whose tax position is being checked. Paragraph 2 lets HMRC demand information about that person from someone else who is likely to hold the relevant paperwork. In an SDLT context the someone-else is almost always a conveyancer, but it can equally be a mortgage broker, a lender, a chartered surveyor who valued the property, a letting agent if the dwelling is buy-to-let, or the seller's solicitor.

The two gating tests at paragraph 3

The reason paragraph 2 is procedurally interesting — and the reason HMRC cannot simply send a third party notice on a Tuesday morning — is paragraph 3. Paragraph 3(1) prohibits the giving of any third party notice without either:

• (a) the agreement of the taxpayer, or
• (b) the approval of the tribunal.

Practically, HMRC tends to ask the taxpayer first. A buyer under SDLT enquiry will routinely be told "we propose to ask your conveyancer for X, Y and Z — do you agree?" before any notice issues. Agreement is the path of least resistance for HMRC because no application to the tribunal is needed and the paragraph 30 appeal route stays open to the third party.

If the taxpayer refuses (or is not engaging), HMRC must apply to the tribunal under paragraph 3(2). The application may, under paragraph 3(2A) (inserted by the Finance Act 2009), be made without notice to the third party except as required by paragraph 3(3).

Paragraph 3(3) sets five preconditions for tribunal approval:

Paragraph 3(4) then carves out a single exception: limbs (c) to (e) can be disapplied if the tribunal is satisfied that taking those steps "might prejudice the assessment or collection of tax". In an SDLT context this carve-out is rare — there is no obvious reason a residential SDLT enquiry would be prejudiced by the conveyancer knowing in advance — but it exists for cases involving suspected concealment, fraud, or where HMRC fears document destruction.

Paragraph 3(5) goes further still. If the tribunal is satisfied that "naming the taxpayer might seriously prejudice the assessment or collection of tax", it may issue a no-name third party notice. The recipient is told to produce documents about an unnamed taxpayer. This is the so-called identity-unknown route used in serious cases — vanishingly rare in mainstream SDLT enquiries.

Paragraph 4: the taxpayer's copy of the notice

The other limb of the procedural framework is paragraph 4. Once HMRC has issued a third party notice, paragraph 4(1) requires the officer to give a copy of the notice to the taxpayer to whom it relates — unless the tribunal has disapplied this requirement.

Paragraph 4(2) sets the disapplication test: the tribunal cannot disapply unless an authorised officer (or someone with their agreement) applies, and the tribunal is satisfied the officer has reasonable grounds for believing that giving a copy to the taxpayer might prejudice the assessment or collection of tax.

The default position, in other words, is that the taxpayer always sees the third party notice. Disapplication is a deliberate, evidenced, tribunal-supervised step — not a routine HMRC convenience.

The statutory records carve-out

Both paragraph 1 (taxpayer notices) and paragraph 2 (third party notices) interact with a separate rule on statutory records. Paragraphs 29(2) and 30(2) both provide that the limited appeal rights against an information notice do not apply where the notice demands "statutory records" — broadly, the records a person is required to keep under primary tax legislation.

The practical effect is that a conveyancer who holds an SDLT return, the contract pack, the buyer's solicitor's certificate, or the completion statement cannot resist a paragraph 2 notice for those records on appeal. Statutory records are statutory records. The only appeal route open in that scenario is paragraph 47 reasonable excuse against any penalty, not the substantive notice itself.

Appeals: paragraph 30 and what it doesn't reach

Paragraph 30(1) gives the third party — not the taxpayer — a limited right to appeal a third party notice "on the ground that it would be unduly onerous to comply with the notice or requirement".

Three points are worth emphasising:

1. Only the third party may appeal. The taxpayer cannot appeal a third party notice served on someone else, even though paragraph 4 entitles them to a copy. The taxpayer's procedural remedies are upstream — at the paragraph 3 agreement-or-approval stage — or downstream, through challenges to any resulting amendment or assessment.
2. The appeal ground is narrow. "Unduly onerous" — not "the information isn't relevant", not "I disagree with HMRC's enquiry", not "my client objects". The conveyancer must show that complying with the notice would be disproportionately burdensome, by reference to the actual scope of the demand.
3. Tribunal-approved notices close the route off entirely. Paragraph 30(3) provides that paragraph 30(1) does not apply where the tribunal approved the giving of the notice under paragraph 3. The logic is straightforward: the tribunal has already weighed the merits at the approval stage, and reopening the same question on appeal would duplicate that exercise.

Paragraph 29(3) does the equivalent for taxpayer notices. Together they mean that tribunal-approved notices — under either limb — are effectively final at the point of issue. The recipient's options narrow to compliance, or non-compliance and the resulting paragraph 39 / paragraph 40 / paragraph 49A penalty stack documented in our Schedule 36 day-rate penalties piece.

Paragraph 1 versus paragraph 2: a side-by-side

Where this fits in an SDLT enquiry

To set scale: in calendar year 2025 there were 848,775 residential transactions registered to the Land Registry pp-complete file (Homecost query against transactions, fetched 28 May 2026). Of those, 488,720 sit above the £250,000 SDLT threshold where any meaningful tax is due, and 33,161 sit above the £925,000 threshold where the 10% slab activates. Every one of those returns is, in principle, in the population HMRC's compliance teams can dip into via a Schedule 10 paragraph 12 enquiry within the nine-month SDLT enquiry window — or, on the discovery route, for up to 4, 6 or 20 years depending on culpability (see our Tooth v HMRC summary).

Within an open enquiry, Schedule 36 is the standard fact-finding tool. The typical SDLT scenarios where a paragraph 2 notice surfaces:

• Non-resident surcharge cases. HMRC suspects a 2% Schedule 9A surcharge applies but the residency declaration on the SDLT1 said otherwise. A paragraph 2 notice to the buyer's solicitor for the day-counting evidence pack, or to the lender for the mortgage application residency declaration, is the standard route.
• Additional-property surcharge replacement-of-main-residence cases. A paragraph 2 notice to the seller's solicitor for the contract date on the previous main residence, or to the letting agent for tenancy dates, to pin down whether the three-year replacement window was met.
• First-time-buyer relief checks. A paragraph 2 notice to the conveyancer for the buyer's solicitor's certificate confirming the relief claim, or to the lender for evidence of prior property ownership inconsistent with FTB status.
• Mixed-use claims. A paragraph 2 notice to the surveyor for the inspection report, or to the seller's letting agent for any commercial tenancy, where the buyer claimed non-residential rates.

In every one of these the conveyancer (or surveyor, lender, agent) is not the taxpayer. The taxpayer is the buyer. But the paperwork that proves or disproves the claim sits with the third party. That is precisely the gap paragraph 2 was drafted to close.

Worked example: a £750,000 London purchase under enquiry

Take a £750,000 freehold purchase in SW1A 1AA registered in March 2025. At standard SDLT rates this attracts £27,500 of SDLT — £2,500 on the £125,000–£250,000 slice plus £25,000 on the £250,000–£750,000 slice (calculated via Homecost's stamp duty calculator).

Suppose the buyer claimed FTB relief, which would reduce the bill to nil (full relief on purchases at or under £425,000 was withdrawn from 1 April 2025 — the £425,000 threshold reverted to £300,000 — but this hypothetical sits before that change for illustration). HMRC opens an enquiry under FA 2003 Schedule 10 paragraph 12 within the nine-month window. The compliance officer suspects the buyer owned a prior property and is not in fact a first-time buyer.

The natural document the officer wants is the buyer's solicitor's certificate, plus any prior conveyancing file fragments that name the buyer as a registered proprietor. A paragraph 1 notice to the buyer would work, but the buyer says "I don't have those documents — my conveyancer does". A paragraph 2 notice to the conveyancer is the cleanest route.

Procedurally:

1. HMRC asks the buyer to agree to the issue of a paragraph 2 notice to the conveyancer. If agreed, the notice issues with no tribunal involvement.
2. If the buyer refuses, HMRC applies to the First-tier Tribunal (Tax Chamber) under paragraph 3(2). The conveyancer is told (paragraph 3(3)(c)), the conveyancer's representations are summarised to the tribunal (paragraph 3(3)(d)), and the buyer is told the reasons (paragraph 3(3)(e)).
3. If approved, the notice issues. The conveyancer's appeal route under paragraph 30(1) is closed off by paragraph 30(3) because the notice is tribunal-approved.
4. The buyer's copy of the notice arrives by virtue of paragraph 4(1) — there is no plausible reason for paragraph 4(2) disapplication on facts like these.

The conveyancer then has the period stated in the notice (commonly 30 days) to comply. Non-compliance starts the day-rate penalty stack at paragraph 39 (£300 initial), paragraph 40 (£60 per day continuing), and on tax-related exposure the paragraph 50 Upper Tribunal route described in our Schedule 36 paragraph 50 tax-related penalty piece.

What changed in 2021

The Finance Act 2021 expansion of paragraph 2(1) to cover "collecting a tax debt of the taxpayer" deserves a brief flag. Before that amendment, paragraph 2 was confined to checking the tax position — that is, the information-gathering stage of an open enquiry. After the amendment, HMRC can also use paragraph 2 to gather information needed for collection — for instance, to identify a debtor's bank account or employer once an assessment has been determined and become enforceable.

In the SDLT context this matters most where an assessment has been raised, the taxpayer has stopped engaging, and HMRC needs third-party records to enforce. The pre-2021 work-around was paragraph 5 (notices about persons whose identity is not known) and the wider information powers in the Taxes Management Act 1970 — clunkier and slower. The 2021 amendment closed the gap.

A note on standing for the taxpayer

One feature of the paragraph 2 framework that catches taxpayers out: although the taxpayer is entitled to a copy of the notice (paragraph 4), and is entitled to a summary of the reasons at the tribunal-approval stage (paragraph 3(3)(e)), the taxpayer is not a party to the third party's appeal under paragraph 30. The taxpayer cannot lodge an appeal on the third party's behalf and cannot argue "unduly onerous" at the conveyancer's hearing.

If the taxpayer wants procedural relief, it has to come either at the paragraph 3 approval stage (representations against the application, if the taxpayer has notice — which under paragraph 3(2A) is not always the case) or in the substantive proceedings that follow any amended return or discovery assessment. The information notice itself, once issued and either agreed or tribunal-approved, is not the taxpayer's battleground.

Practical takeaways

A factual summary, not advice. The points worth holding in mind:

1. A paragraph 2 notice is the standard route for HMRC to extract conveyancing, valuation, lending and letting records during an SDLT enquiry. It is not unusual; it is the default.
2. HMRC needs the taxpayer's agreement or tribunal approval before serving. The agreement route is common and routine.
3. The taxpayer receives a copy of the notice by default (paragraph 4). Disapplication requires a separate tribunal application on prejudice grounds.
4. Only the third party may appeal, and only on "unduly onerous" grounds. Tribunal-approved notices close even that route.
5. Statutory records — anything the recipient is required to keep under tax law — cannot be resisted on appeal even where the appeal route would otherwise be open.
6. The 2021 expansion to tax-debt collection means a paragraph 2 notice can also follow a determined assessment, not just an open check.

Anyone facing a paragraph 2 notice — taxpayer or third party — should take qualified legal advice before responding. The procedural choices made in the first 14 days (agree, refuse, apply for tribunal review, comply, partially comply) shape the next twelve months of the enquiry, and the day-rate and tax-related penalty exposure ratchets up quickly if the route taken does not match the statute. A chartered tax adviser, solicitor, or specialist tax counsel is the right port of call.

For the wider picture of how SDLT enquiries are opened, escalated and (sometimes) defended, see our overview of the SDLT enquiry window and HMRC challenge letters and the Cost Intelligence section of the Homecost blog. To work through your own SDLT exposure before any enquiry lands, the Homecost stamp duty calculator handles all four UK regimes and the standard reliefs in one place.

This article is general information about the procedural framework of Schedule 36 to the Finance Act 2008. It is not tax or legal advice. The application of these rules to any specific transaction depends on the full facts and on advice from a qualified solicitor, chartered tax adviser, or specialist tax counsel. Speak to a qualified adviser before acting.