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HMRC internal manual

Compliance Handbook

How to do a compliance check: compliance check series of factsheets: when to issue factsheets

You should issue the appropriate factsheet(s) in all these circumstances.

At the start of the compliance check 

You ask the customer to send you electronic records

You issue an information notice

You write to notify a visit or inspection

You visit unannounced

You ask for evidence of behaviour

You are considering suspending a penalty

PDDD applies

There is a dispute

You are asked for more information about appeals

{#start}At the start of the compliance check

  1. Issue one of these factsheets.

CC/FS1a - General information about compliance checks

CC/FS1b - General information about compliance checks by Compliance Centres

CC/FS1c - General information about compliance checks into certain large and complex businesses

CC/FS1d - General information about compliance checks into Excise matters

These factsheets tell the customer

  • what a compliance check is and what to expect
  • about their rights
  • about the advantages of disclosing any known

    • inaccuracies
    • failures to notify
    • wrongdoings
    • deliberate withholding of information
  • where they can find information about the Human Rights Act.
  1. If you suspect evasion at this stage, (after making an Evasion Referral, if appropriate, see CH402150) you may also want to consider issuing factsheet CC/FS9 The Human Rights Act and penalties and the relevant penalty factsheet from the list in You ask for evidence of behaviour.

{#electronicrecords}You ask the customer to send you electronic records {.filledcircle}

You should send factsheet CC/FS22 Sending us electronic records

  • with your ‘opening letter’ if you are asking for electronic records at the start of the check, or
  • when you ask for electronic records to be sent to you at any other stage during the check.

This factsheet explains to the customer

  • what we mean by electronic records
  • what happens if we ask them to send electronic records to us during a compliance check.

{#infonotice}You issue an information notice

Factsheet CC/FS2 Information notices tells the person:

  • what an information notice is
  • when we use them
  • about their rights.

You must only issue factsheet CC/FS2 when you are issuing an information notice under FA08/Sch36, see CH221000.

You must not issue factsheet CC/FS2 if:

  • you are requesting information without issuing a formal information notice
  • you are using Excise powers under CEMA79. The factsheet to use when carrying out checks under CEMA79 is factsheet CC/FS16 Excise visits.

{#visit}You write to notify a visit or inspection

Factsheet CC/FS3 Visits - by agreement or with advance notice tells the person:

  • why we visit business premises
  • about the visit
  • about their rights.

You must issue a copy of factsheet CC/FS3 when you write to tell the person that you intend to visit them, see CH253000.

You must not use factsheet CC/FS3 if:

  • you are carrying out an unannounced inspection. Instead you must use one of the factsheets in You visit unannounced.
  • you are using Excise powers under CEMA79. The factsheet to use when carrying out checks under CEMA79 is factsheet CC/FS16 Excise visits.

{#unannounced}You visit unannounced

Factsheet CC/FS4 Unannounced visits for inspections tells the person:

  • why we make unannounced visits
  • about their rights.

You must also serve the person with a Notice of Inspection.

If the unannounced visit is at the start of the compliance check you must also issue the appropriate general information factsheet from the list in At the start of the compliance check.

You must not use factsheet CC/FS4 when carrying out an Excise visit using powers under CEMA79. Instead, use factsheet CC/FS16 Excise visits.

If you undertake a tribunal approved unannounced visit to carry out an inspection you must issue factsheet* CC/FS5 Unannounced visits for inspections approved by the tribunal.*

Factsheet CC/FS5 tells the person:

  • that the visit has been authorised by a tribunal
  • about the penalties we can charge if they refuse entry
  • about their rights.

{#evidence}You ask for evidence of behaviour

In all cases where there is an inaccuracy, under-assessment, failure to notify or VAT or excise wrongdoing, you need evidence to enable you to make a penalty decision. Unless you already have evidence that the non-compliance was a mistake despite taking reasonable care or a non-deliberate failure, you need to ask the customer about how the non-compliance happened in order to gather the evidence. Before you do this you must explain to them their right not to self-incriminate and issue them with factsheet CC/FS9 The Human Rights Act and penalties.

You should also give them the factsheet on the penalty or penalties that may be charged.

CC/FS7a Penalties for inaccuracies in returns or documents

 CC/FS7b Penalties for not telling us about an under-assessment

* CC/FS11 Penalties for failure to notify *

 CC/FS12 Penalties for VAT and Excise wrongdoing

 CC/FS15 Self Assessment and old penalty rules

 CC/FS17 Higher penalties for Income Tax and Capital Gains Tax involving offshore matters

CC/FS18a Penalties for failure to file returns on time – Income tax and Capital Gains Tax

CC/FS18b Penalties for failure to file returns on time – Construction Industry Scheme (CIS)

CC/FS18c Penalties for failure to file returns on time – Machine Games Duty

CC/FS19 Employer and contractor returns and ‘old’ penalty rules

CC/FS20 VAT dishonest conduct penalties

If you think that a penalty for deliberate behaviour or civil evasion might be payable, you should also issue factsheet CC/FS14 Managing Serious Defaulters at this time.

{#suspending}You are considering suspending a penalty

Factsheet *CC/FS10 Suspending penalties for careless inaccuracies in returns or documents *tells the person:

  • when we can suspend a penalty
  • when we cannot or will not suspend a penalty
  • about setting suspension conditions and the period of suspension
  • about what happens at the end of the suspension period
  • about their rights.

You must issue factsheet CC/FS10 when you have established that there is a careless inaccuracy, even if you do not believe it will be possible to set SMART conditions. Do not wait until you issue the NPPS100 Penalty Explanation letter before you issue factsheet CC/FS10.

CH83130 explains when a penalty may be suspended.

{#pddd}PDDD applies

Factsheet CC/FS13 Publishing Details of Deliberate Defaulters (PDDD) tells the person:

  • why we publish details of deliberate defaulters
  • how to avoid having their details published
  • how we decide whether to publish their details
  • what information we can publish
  • where and for how long we will publish their details
  • about their rights.

You should issue factsheet CC/FS13 as soon as you have an evidence-based reason to believe that:

  • there is a deliberate inaccuracy, failure to notify or VAT or Excise wrongdoing and
  • the PLR may exceed £25,000.

In certain circumstances it will be appropriate to issue factsheet CC/FS13 at the start of a compliance check, for example, a person makes a disclosure of a deliberate inaccuracy, failure to notify or VAT or Excise wrongdoing before or at the start of a compliance check and the PLR may exceed £25,000, see CH500500.

{#dispute}There is a dispute

You should issue factsheet CC/FS21 Alternative Dispute Resolution if

  • the person asks for it, or
  • the ADR team has agreed that it is appropriate to invite the customer to apply for ADR.

For further guidance on ADR, see CH280400.

Factsheet CC/FS21 explains:

  • how Alternative Dispute Resolution (ADR) can be used to resolve a dispute during a compliance check
  • what types of dispute are suitable for ADR
  • how to apply for ADR.

{#appeals}You are asked for more information about appeals

You must only issue HMRC1 if the person:

  • asks for it or
  • asks for information about appeals and reviews.

Do not routinely issue HMRC1 with decision notices.

Factsheet HMRC1 HM Revenue & Customs decisions – what to do if you disagree explains what a person can do if they do not agree with a decision they can appeal against. This includes details of how to ask for a review and how to appeal to the independent tribunal.

 

When to issue factsheets