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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for Inaccuracies: Calculating the Penalty: Penalty reductions for quality of disclosure: Determining the 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.

To arrive at the disclosure reduction you need to assess the quality of each of the three elements of the disclosure, see CH82430, by reference to

  • timing
  • nature, and
  • extent.

The guidance at CH82440, CH82450 and CH82460, provides examples of the circumstances that you will need to take into account.

When you have taken all relevant factors into account the percentage you have arrived at by totalling the three elements of the disclosure (telling, helping and giving access, see CH82430) will reflect the overall quality of the disclosure. Consider any representations made by the person. They may be able to offer evidence which leads you to a different view of the disclosure.

At this point you should take time to consider whether the disclosure reduction is reasonable taking into account all the circumstances of the case. But remember that the penalty percentage must sit between the maximum and minimum levels set by law for that behaviour.

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.

You should then use this percentage to calculate the amount of penalty to be charged. For guidance on the process to follow, see CH82510.

There will be cases where the circumstances are such that little in the way of telling, helping and access is needed to establish the reasons for the person giving an inaccurate document and the amount of any additional tax due.

You should allow the full reduction for those elements of the disclosure that are not required.

For example

If you hold reliable third party information that clearly identifies the amount of the inaccuracy the person need only tell you about the circumstances that gave rise to the inaccuracy to qualify for the maximum reduction for ‘telling’ and ‘helping’.

This should include enough detail to give you assurance that the inaccuracy is not part of a wider pattern.

If you decide that no further documentary evidence is required the person should be given the maximum reduction for ‘access’.

There are overlaps between the three elements of disclosure so that a single course of action may qualify for a reduction under more than one heading. Equally a failure to do something or a misleading action may result in a loss of reduction points under more than one heading.

FA07/SCH24/PARA9 (3)