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HMRC internal manual

Compliance Handbook

Charging penalties: calculating penalties: reductions for disclosure: quality of disclosure

The amount of the reduction for disclosure needs to be calculated to reflect the quality of the disclosure made.

Quality includes the timing, nature and extent of the disclosure.

To help with the calculation process, these elements have been allocated the following percentages within the total allowable reduction

Telling Up to 30%
Helping Up to 40%
Giving access Up to 30%
Total 100% maximum reduction

You must decide what percentage to allow for each of the three elements.

For penalties involving offshore matters you must take into account the requirement for the person seeking a reduction in a penalty relating to an offshore matter or offshore transfer to provide additional information, concerning

  • any person (enabler) who encouraged, assisted or otherwise facilitated conduct that constitutes offshore evasion or non-compliance by the person subject to the penalty
  • information about assets held in any country outside the UK (CH111100) and any nominees or entities used to hold those assets on behalf of the person subject to the penalty.

For specific guidance on this requirement see CH117000.

The total reduction is calculated by NPPS (National Penalty Processing System), see COG90680, when you have input the percentage reductions for Telling, Helping and Giving (as well as the behaviour, and a decision on whether disclosure was unprompted or prompted).

To get a full reduction for ‘Telling’, a person must disclose any inaccuracy, failure to notify, withholding of information or wrongdoing that they are aware of at the start of your check. This is explained in the general information factsheets CC/FS1 (a, b c or d) (HMRC website). The appropriate factsheet must be given to the person at the start of your check.

You may need to calculate reductions separately for different inaccuracies, failures and wrongdoing found within a compliance check. You should consider each in turn and review when and how you became aware of them and to what extent the person helped you to quantify the unpaid tax or duty and gave you access to the records needed.

You should invite the person or their representative to give a view on what they think their reductions for disclosure should be. This can be done during a meeting and/or in a letter explaining the reason or reasons for your conclusions, see CH408000. You must inform them that your conclusions are not final until they agree them or they are sent a penalty assessment, which they can appeal against.

You must keep a record of your discussion or discussions with the person or their agent. You must also record in the case papers the reasoning and evidence for your conclusions. This may be required for authorisation, quality assurance and in the event of a review or an appeal.

For more detailed and technical guidance on quality of disclosure, refer to

  • inaccuracies and under-assessment, see CH82430 
  • failures to notify, see CH73220
  • failure to file and deliberate withholding of information, see CH63220 
  • VAT and excise wrongdoing, see CH94850.