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HMRC internal manual

Compliance Handbook

How to do a compliance check: establishing behaviour

As soon as you find an inaccuracy, failure or wrongdoing you need to start establishing what behaviour led to it in order to

  • charge a penalty that reflects the person’s culpability, see CH402050 or
  • collect evidence to support a decision that the person took reasonable care to declare the right amount of tax, see CH81140.

You must gather sufficient evidence to support your view of behaviour. This can be done in a number of ways according to the type of compliance check and the level of cooperation received.

You establish behaviour that results in a penalty being payable when

  • a person acknowledges that they acted carelessly, deliberately, or deliberately with concealment of the inaccuracy, failure or wrongdoing or
  • you have gathered enough evidence to support your decision.

Before asking about or discussing how an inaccuracy, failure to notify, wrongdoing or withholding of information occurred, you must make the person aware of their human rights and also explain about penalties and reductions for disclosure, see CH402350. The exceptions would be

  • inaccuracies that are mistakes despite taking reasonable care, or
  • failures to notify that are not deliberate.

You need to record and present sound evidence and reasons for your findings, see CH402550.

It is important that you establish behaviour in all cases.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) CH402170(This content has been withheld because of exemptions in the Freedom of Information Act 2000) CH402150(This content has been withheld because of exemptions in the Freedom of Information Act 2000)