Calculating the penalty: determining the quality of disclosure
To arrive at the disclosure reduction you need to assess the quality of each of the three elements of the disclosure, (telling, helping and giving access) by reference to:
- nature, and
The guidance at AWRS100400 provides examples of the circumstances that you will need to take into account when considering trading without approval situations.
When you have taken all relevant factors into account the percentage you have arrived at by totalling the three elements of the disclosure (telling, helping and giving access) will reflect the overall quality of the disclosure. Consider any representations made by the person. They may be able to offer evidence which leads you to a different view of the disclosure.
At this point you should take time to consider whether the disclosure reduction is reasonable taking into account all the circumstances of the case. But remember that the penalty percentage must sit between the maximum and minimum levels set by law for the behaviour.
You should then use this percentage to calculate the amount of penalty to be charged. For guidance on the process to follow, see AWRS111200.
There will be cases where the circumstances are such that little in the way of telling, helping and giving access is needed to establish the reasons for the person trading without approval.
You should allow the full reduction for those elements of the disclosure that are not required.
You may hold reliable third party information that suggests a business is making wholesale sales and they are not approved. If the person admits the contravention and works with us to correct it they may qualify for the maximum reduction for telling and helping.
This telling should include enough detail to give you assurance that there are no other wholesale activities that the person has failed to tell us about including voluntarily letting you know about other trading/storage premises they may have.
If you decide that no further evidence is needed, the person should be given the maximum reduction for ‘giving access’.
There are overlaps between the three elements of disclosure so that a single course of action may qualify for a reduction under more than one heading. Equally a failure to do something or a misleading action may result in a loss of reduction points under more than one heading.
- admitting the failure
- disclosing the failure in full
- explaining how and why the failure occurred.
What is important is the timing, nature and extent of the telling of the disclosure.
- The timing is only relevant to the period over which the disclosure is made. It is how long it takes for the person to complete the telling. It is nothing to do with how much time has elapsed between the date they started trading as a wholesaler and the time the disclosure is made. When the person tells you about an act or failure they must tell you all the facts at that time. If they do not, they may not receive the full reduction. In some instances the person may have to do very little to gain the full reduction for telling. For example, a person may simply need to tell us that they have started trading without approval providing you are satisfied they have not withheld any other information.
- The nature covers why the failure occurred. The person needs to show a positive approach to telling what has happened not just reacting to questions unless this was clearly all that was required or all that the person was capable of, taking into account their abilities and circumstances.
- The extent is whether everything is disclosed to us. If there is only a partial disclosure then a full reduction will not be due. There is an overlap here with ‘helping’ - a disclosure that makes no reference to the scale of a failure is not considered to be a complete disclosure.
Overall, the telling to you about the disclosure must be positive and as complete as possible, taking into account the person’s circumstances and ability. In order to qualify for the full reduction for ‘telling’ they must:
- agree that we have a different interpretation of the law
- tell us everything we need to know about the contravention, and
- why they disagree.
- giving reasonable help in establishing, for example when trading started, who their suppliers and customers are and the nature of their wholesale activity
- positive assistance as opposed to passive acceptance or obstruction
- actively engaging in the work to accurately quantify any other taxes the person may be liable for
- volunteering any information relevant to the disclosure.
What is important is the timing, nature and extent of the help the person provides.
In considering whether a person has given reasonable help, you should always take account of the abilities and circumstances of the person. You should not, for example, penalise the person for not helping us with matters where the person knows we already have the necessary information.
- The timing is relevant to the period over which the help is given. As well as there not being any avoidable delays there should be an active approach, providing information and access to records as early as possible.
- The nature covers whether the help is useful and saves you time and effort. For the person to just appear to be helpful but not actually producing anything of use is not what is required.
- The extent of the help covers the whole period of the compliance check from start to finish and all aspects of the compliance check. If help is only received for part of the time or in certain aspects you would not give the full reduction.
- producing business accounts
- quantifying unrecorded income or sales (by reference to non-business records or private expenditure)
- obtaining evidence capable of verification, for example, bank statements
- attending meetings with you where that is the best way to establish the extent of their wholesale activity.
Giving access includes a person responding positively, taking into account their abilities and circumstances, to requests for information and documents and allowing access to:
- their business and other records
- other relevant documents.
Access is needed primarily for you to make sure that they have been dealing in duty paid alcohol despite not being approved. Giving access is more than simply complying with requests for information.
What is important are the timing, nature and extent of the access given.
- A person should give access when requested and there should rarely be a need for us to use information powers or issue reminders. If it is not possible to produce the records or relevant documents at the time of the request the person should give reasons and make every effort to provide them as soon as possible.
- The person should offer access to their records and documents at a convenient and agreed location. If you require copies these should be provided. If you encounter difficulties in getting access then you should not give the full reduction.
- The extent of the access given covers what records and documents are made available. It is the person who knows what records and documents exist or can be obtained and it is for them to tell us. If there are records or documents that are not offered then the full reduction is not due. However you should only seek access to records that are reasonably required for the purpose of checking the extent of their wholesale sales and whether they have been dealing in duty paid alcohol.