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HMRC internal manual

Compliance Handbook

Penalties for Inaccuracies: Calculating the Penalty: Penalty reductions for quality of disclosure: Quality of disclosure

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

The more a person tells, helps and gives access to us, the more the penalty will be reduced for disclosure. This is the quality of disclosure.

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

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

  • telling us about it, see CH82440
  • giving us reasonable help, see CH82450
  • allowing us access to records, see CH82460.

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 CH116400.

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%

For guidance on how to determine the quality of disclosure, see CH82431.

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 an example, see CH82432.

FA07/SCH24/PARA9 (1)