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HMRC internal manual

Compliance Operational Guidance

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HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: employer and contractor’s role: factsheets replacing codes of practice

Employer Compliance activity was conducted under COP3 which explained the purpose of the visit. This was replaced by a series of Employer Compliance factsheets which amalgamate the contents of COP3 and IR109.

These factsheets have now been replaced by more generic factsheets created following the introduction of new legislation in relation to Powers and Penalties.

The factsheets explain different stages in the employer/contractor compliance check process.

CC/FS1a General Information about compliance checks
CC/FS1c General Information about compliance checks for large businesses
CC/FS2 Information notices
CC/FS3 Visits - by agreement or with advance notice
CC/FS4 Unannounced visits for inspections
CC/FS5 Unannounced visits for inspections with Tribunal approval
CC/FS7a Penalties for inaccuracies in returns and documents
CC/FS7b Penalties for not telling us about an under-assessment
CC/FS9 The Human Rights Act and penalties
CC/FS10 Suspending penalties for careless inaccuracies in returns or documents
CC/FS11 Penalties for failure to notify
CC/FS13 Publishing details of deliberate defaulters
CC/FS14 Managing Serious Defaulters
CC/FS17 Higher Penalties for Income Tax and Capital Gains Tax involving offshore matters
CC/FS18b Late filing penalties for the Construction Industry Scheme
CC/FS19 Employer and contractor returns and ‘old’ penalty rules
HMRC1 HMRC decision - what to do if you disagree
Complaints and putting things right

CC/FS1a General Information about compliance checks

CC/FS1c General Information about compliance checks for large businesses

These provide general information on

  • what happens during a compliance check
  • what the employer needs to do
  • what happens at the end of the check
  • what happens if we find something wrong
  • what the employer/contractor should do if we make a decision that can be appealed against
  • where they can find information about the Human Rights Act.

You must send it with the notification of a proposed compliance check. For further information see CH202050.

CC/FS2 Information notices

This explains what happens when we ask for information or documents during a compliance check and

  • which information and documents we can ask for
  • what happens if we send the employer/contractor an information notice
  • what the employer/contractor should do if they disagree
  • asking other people for information about the employer/contractor.

You must issue it when you issue an information notice. See CH223100.

For further information see CH202100.

CC/FS3 Visits - by agreement or with advance notice

This explains why we visit business premises and why we look at business records or assets. You must issue it when you write to tell the person that you intend to visit them.

For further information see CH202125.

CC/FS4 Unannounced visits for inspections

This explains why we may need to make an unannounced visit and sets out the rights of the employer/contractor visited. Such visits may be common in Hidden Economy cases.

You must issue it at the same time you issue/hand the Notice of Inspection to the employer/contractor.

For further information see CH202150.

CC/FS5 Unannounced visits for inspections with Tribunal approval

On occasions it may be necessary to seek Tribunal approval prior to making an unannounced visit.

This explains why we make an unannounced visit and sets out the rights of the employer/contractor. You must issue/hand it to the employer/contractor at the same time as the Tribunal approved Notice of Visit. See CH254030.

For further information see CH202175.

CC/FS7a Penalties for inaccuracies in returns and documents

This explains about penalties for inaccuracies arising within returns or documents with a filing date after 1/4/2009:

  • what the employer/contractor should do if they think they have made an error
  • what happens when we find out about an error
  • what the different types of error are
  • how the employer/contractor can reduce any penalty we charge
  • how we work out the amount of the penalty
  • what happens if we charge the employer/contractor a penalty
  • what the employer/contractor should do if they disagree
  • when different rules apply.

You must issue it as soon as you have established that

  • the return or document you are checking contains an inaccuracy and
  • the inaccuracy may result in potential lost revenue.

For further information see CH202235.

CC/FS7b Penalties for not telling us about an under-assessment

This explains about penalties for an under-assessment:

  • what the employer/contractor should do if they think there is an under-assessment
  • what happens when we find out about the under-assessment
  • how the employer/contractor can reduce any penalty we charge
  • how we work out the amount of the penalty
  • what happens if we charge the employer/contractor a penalty
  • what the employer/contractor should do if they disagree.

You must issue it as soon as you have established

  • an assessment we sent was too low and
  • the employer/contractor did not tell us it was too low within 30 days of the date of the assessment.

For further information see CH202245.

CC/FS9 The Human Rights Act and penalties

This explains a person’s (including companies) rights under European Convention on Human Rights. See COG906050 for the background to HRA and COG906070 for when to provide HRA advice.

You must issue it as soon as you have an evidence-based reason to believe that a penalty may be due.

For further information see CH202275.

CC/FS10 Suspending penalties for careless inaccuracies in returns or documents

This explains what happens when we consider suspending penalties for careless inaccuracies:

  • when we can suspend a penalty
  • what you need to do before we suspend a penalty
  • what happens at the end of a suspension period
  • what the employer/contractor should do if they disagree.

You should issue factsheet CC/FS10 when a penalty is to be charged for such inaccuracies and where the circumstances allow us to suspend the penalty. See CH83110.

For further information see CH202300.

CC/FS11 Penalties for failure to notify

This explains about the penalties we may charge where there is a failure to notify liability to tax:

  • what the employer/contractor should do where there is a failure to notify
  • what happens when we find out about a failure to notify
  • how the employer/contractor can reduce any penalty we charge
  • what the employer/contractor should do if they disagree.

You must issue it as soon as you have established that

  • there is a failure to notify and
  • the failure to notify may result in potential lost revenue.

For further information see CH202325.

CC/FS13 Publishing details of deliberate defaulters

This explains what we mean by deliberate defaulters and why we publish details of deliberate defaulters:

  • when we may charge a deliberate defaulter penalty
  • how the employer/contractor can avoid having their details published
  • what happens once we have decided to publish details
  • what information we can publish.

You must issue factsheet CC/FS13 and tell the employer/contractor that we may publish their details as soon as you have an evidence-based reason to believe that

  • there is a deliberate inaccuracy, failure to notify or VAT or Excise wrongdoing and
  • the potential lost revenue may exceed £25,000.

For further information see CH202375.

CC/FS14 Managing Serious Defaulters

This explains how we manage deliberate defaulters and what we monitor.

You should issue factsheet CC/FS14 once you have considered the facts and formed the view that the behaviour is deliberate. This may be during the compliance check, and can be before the view on behaviour is authorised. You must tell the employer/contractor that your view is subject to authorisation.

For further information see CH202400.

CC/FS17 Higher Penalties for Income Tax and Capital Gains Tax involving offshore matters

This explains about the higher penalties for inaccuracies, a failure to notify or a failure to file on time when:

  • the tax at stake is income tax or capital gains tax and
  • an offshore matter relating to categories 2 or 3 is involved
  • what is an offshore matter
  • how we work out the penalty.

You must issue factsheet CC/FS17 at the same time as CC/FS7a and CC/FS11 or CC/FS18a depending on the type of penalty.

For further information see CH202455.

CC/FS18b Late filing penalties for the Construction Industry Scheme

This explains about the penalties for failing to file returns on time:

  • what penalties we may have already charged
  • when we can increase the percentage of further penalties
  • how we work out the amount of the penalty
  • what the employer/contractor should do if they disagree.

You must issue it when you believe that by failing to file a return within 12 months, the employer/contractor

  • withheld information and
  • knew that the information would help us to correctly establish any liability to make payments that should have been shown on their return.

For further information see CH202465.

CC/FS19 Employer and contractor returns and ‘old’ penalty rules

This explains what happens for penalties that arise for periods prior to 1/4/2009 where offences may include:

  • a fixed penalty
  • a maximum penalty of a set amount
  • a tariff based penalty
  • initial and daily penalties.

It also explains:

  • when we will charge a penalty
  • how we calculate penalties that are the maximum of the difference between the amount paid or returned and what it should be
  • the abatement process and
  • advises of HRA (although this still should be discussed by the caseworker COG906070 and factsheet CC/FS9 issued).

You must issue it as soon as you have reason to believe that the employer/contractor may be liable to a penalty under old rules for a late or incorrect employer or contractor return.

See also COG905160 for guidance regarding obstructive employers and contractors.

For further information see CH202470.

HMRC1 HMRC decision - what to do if you disagree

This explains what to do if the employer/contractor does not agree with one of our decisions made on or after 1/4/2009 and includes

  • disagreeing with an HMRC decision
  • tell us now if the employer/contractor disagrees
  • what to do if agreement cannot be reached
  • how a review works
  • appealing to the tribunal
  • payment of tax during reviews and appeals.

You should issue it when a decision is made.

All of these factsheets can be accessed via SEES>Forms and Letters>General>Local Compliance>Factsheets.

Complaints and putting things right

Previously any customer complaints were covered by COP1. This COP has also been replaced by a factsheet that explains

  • how to complain to us
  • how we handle complaints
  • taking a complaint further
  • making amends
  • complaints about serious misconduct by our staff.

You should provide a copy of the factsheet

  • to any employer or contractor who requests one or
  • if the employer or contractor wishes to complain.

A copy can be obtained via the intranet A-Z index>Complaints, dealing with customers and putting things right>Guidance>Complaints factsheet.