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HMRC internal manual

Compliance Handbook

Managing serious defaulters (MSD) for specific customer groups: LB (Large Business) and L&C (Large and Complex)

Large Business (LB) and Large and Complex (L&C) joined the Managing Serious Defaulters (MSD) process on 1 April 2012.

This guidance now applies to all LB and L&C customers subject to the specific guidance below.

The guidance should be followed whenever a deliberate penalty is charged on a customer in the Large Business sector after 1 April 2012.

Monitoring behaviours and compliance is already part of the managed customer relationship strategy for this sector and so responsibility for applying the MSD process to Large Business cases will continue to rest with the Customer Relationship Manager (CRM) or the Lead Tax Specialist in Customer Co-ordinator (CC) cases, and not with the Serious Defaulters Management Unit (SDMU).

Whenever a deliberate penalty has been charged, the CRM or Lead Tax Specialist must consider whether the business should be brought within MSD.

This will be appropriate in all cases where there is a serious ongoing risk of deliberate default.

Where a business is to be included in MSD, the CRM or Lead Tax Specialist should:

  • notify the SDMU using the latest version of the Penalty Decisions and Actions Checklist (PDAC) in SEES
  • notify the business formally of its inclusion in MSD and issue factsheet CC/FS14
  • confer non-low risk status on the business
  • meet with the case team to agree additional rigorous monitoring activity
  • advise the business of any additional reporting requirement and proposed monitoring activity
  • review ongoing inclusion within MSD as part of the annual risk review
  • advise the business and the SDMU when it is removed from MSD.

For L&C cases, consideration should also be given to putting the business into the Behavioural and Systemic Risk Response Programme (BSRRP).

Cases excluded from MSD

Any person who makes a full, unprompted disclosure of a deliberate default to HMRC and receives a full reduction for the quality of their disclosure will not be included in the MSD process.

Inclusion in the monitoring programme must not prejudice ongoing prosecution work. Any case with ongoing Criminal Investigation (CI) interest should not be taken into the MSD monitoring process.