Penalties for VAT and Excise Wrongdoing: Calculating the penalty: Reducing the penalty: Unprompted or prompted disclosure: Examples
Example 1 - unprompted disclosure
Simon Fellows has been using the red diesel acquired for his farm machinery in his family car. He has used his brother-in-law’s diesel receipts in his business records to conceal the fact that he has not been buying ordinary diesel. On finding out that his neighbour has been caught using red diesel illegally, Simon gets his own papers together and rings us to make a full confession.
This is an unprompted disclosure because Simon had no reason to suspect that we were about to discover his illegal use of red diesel.
Example 2 - prompted disclosure
Derek Trotter is the director of a construction company that is building a block of flats. Before he leaves the site each time, Derek fuels his car from the on-site red diesel tank. He is well aware that this is illegal and he has not set up any way of checking how much diesel should be in the tank. He makes no attempt to conceal his activities beyond filling the car when there is nobody on-site. A member of the public reports this and the next time he leaves the site the HMRC Road Fuel Testing Unit are waiting around the corner.
As Derek has been caught this cannot be an unprompted disclosure. However, this is not the first time he has done this and to reduce the size of the possible further penalties in respect of each time he has fuelled his car, he could make a disclosure of the previous times he has used the red diesel. These will be unprompted disclosures.