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HMRC internal manual

Compliance Handbook

Penalties for Failure to Notify: Calculating the penalty: Penalty reductions for quality of disclosure: Quality of disclosure

The maximum penalty percentage is reduced by an amount that represents the quality of disclosure.

The more a person tells, helps or gives access to us, the more the penalty will be reduced.

The term ‘reduction for disclosure’ replaces the terms ‘abatement’ and ‘mitigation’ used in previous penalty regimes.

To calculate the reduction for disclosure you need to consider the three elements of disclosure,

  • telling us about it, see CH73300
  • giving us reasonable help, see CH73320
  • allowing us access to records, see CH73340.

Where an offshore matter or offshore transfer, see CH100000, is a factor in the disclosure, Schedule 21 FA 2016 introduced a new element to the quality of disclosure for years 2016-17 and later. ‘Additional information’ is now to be taken into account alongside telling, helping and giving when considering the quality of any disclosure to HMRC. This new element only applies to offshore matters and offshore transfers. See CH117000 for further guidance.

When calculating the amount of the penalty for any year, you will also need to establish whether the error falls within category 1, 2 or 3, see CH114400.

As a guide you may weight the elements of disclosure as follows:

Element of disclosure Percentage
Telling 30%
Helping 40%
Giving access 30%
Total 100%

Where a person has taken a significant period to correct their non-compliance, or, they would previously have been able to make their disclosure through one of HMRC’s offshore facilities they can no longer expect HMRC to agree full reduction for disclosure. In such cases it is unlikely that HMRC would reduce the penalty more than 10 percentage points above the minimum of the statutory range.  For this purpose we would normally consider a ‘significant period’ to be over three years or less where the overall disclosure covers a longer period.

For guidance on how to determine the quality of disclosure, see CH73240.

For examples, see CH73260.

FA08/SCH41/PARA12 (2) & (4)