Penalties for VAT and Excise Wrongdoing: Calculating the penalty: Reducing the penalty: Determining the quality of disclosure
To arrive at the disclosure reduction you need to assess the quality of each of the three elements of the disclosure, see CH94850, by reference to
- nature, and
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 CH94850) 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.
You should then use this percentage to calculate the amount of penalty to be charged. For guidance on the process to follow, see CH95550.
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’s VAT or other wrongdoing and the amount shown as, or attributable to, VAT on an invoice issued by an unauthorised person or excise duty due.
You should allow the full reduction for those elements of the disclosure that are not required.
You may hold reliable third party information that clearly identifies the amount of VAT on an invoice issued by an unauthorised person. The person need only tell you about the circumstances that gave rise to the wrongdoing to qualify for the maximum reduction for ‘telling’ and ‘helping’.
This should include enough detail to give you assurance that there are no other instances of unauthorised issue of invoices. If you decide that further documentary evidence is not 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.