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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: commencing the compliance check: opportunity to disclose

COG905085 explains the importance of giving the employer/contractor the opportunity to disclose any problems at an early stage.

The question

  • ‘have all payments to employees and directors been taxed, NIC accounted for and the payments entered in the pay records?’ or
  • ‘have subcontractors been verified by HMRC before payment was made?’

is important because

  • it gives the employer/contractor the opportunity to disclose inaccuracy and
  • helps establish culpability if inaccuracies are discovered which the employer/contractor failed to mention.

You should

  • try and get a straight ‘yes’ or ‘no’ reply.

If necessary you should

  • repeat the question to make sure the employer/contractor has understood it and/or
  • press for a specific response where the employer/contractor

    • attempts to avoid the issue or
    • fails to give a straight answer.

We cannot force a straight reply. Make a clear note of any reply given to you.

Where the answer is ‘no’ you should

  • establish what the payments are for and the systems in place to account for the payments
  • test the system and
  • issue factsheets CC/FS7a Penalties for inaccuracies in returns or documents, CC/FS19 Employer and contractor returns and ‘old’ penalty rules, provide HRA advice where appropriate and issue factsheet CC/FS9 The Human Rights Act and penalties, see COG906060.

The employer’s/contractor’s response must be recorded in the Notes of Meeting (COG905295).