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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.

For an example, see CH82432.

NOTE - Where a person has taken a significant period to correct their non-compliance in relation to either an onshore or offshore matter, or they would previously have been able to make a disclosure through one of HMRC’s offshore disclosure facilities, they can no longer expect HMRC to give them the full reduction for the quality of disclosure. A ‘significant period‘ is normally considered to be over 3 years but may be less where the overall disclosure covers a longer period.

If you consider that this may apply to your case, see CH82465 for further guidance.

FA07/SCH24/PARA9 (1)