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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: working the case: factsheet CC/FS19 - employer and contractor returns and ‘old’ penalties: when to issue

It is appropriate to issue factsheet CC/F19 (penalties) if

  • the employer/contractor requests one or 
  • when an inaccuracy which may lead to a recovery is discovered or 
  • a penalty offence has been committed.

Deciding when a penalty offence has been committed

A penalty offence has been committed when

  • an employer has failed to submit a return and has not provided a reasonable excuse or 
  • an employer has submitted an incorrect return due to fraud or failure to take reasonable care.

Note: It is only accepted that Article 6 of ECHR applies to those penalties that are based on a maximum of 100% of the tax / NIC difference or the tax / NIC unpaid. ECHR therefore does not apply to the fixed penalties imposed for the first 12 months of lateness but does apply to the duty geared penalties for more than 12 months of lateness.

Failure to take reasonable care may be established prior to the compliance check (particularly when a voluntary disclosure has been made)

  • at the talk through
  • during the walk through or
  • at a follow up meeting.

It is not necessary for the inaccuracy to have been quantified or for behaviours to have been fully explored for failure to take reasonable care to have been established. In fact some inaccuracies, by their very nature, may provide evidence of failure to take reasonable care, for example overtime payments made gross via the cash system.

It is important that the HRA message at CH300900 and factsheets CC/FS7a and CC/FS19 are issued as soon as you have reason to believe a penalty may be due and before you discuss penalties (see CH300700).

You must then go on to

  • fully establish behaviours and
  • quantify the inaccuracy.

You should, (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

  • make sure the employer/contractor is aware that they do not need to co-operate (COG906070)
  • issue factsheet CC/FS19 to the employer or contractor
  • record in the notes of meeting

    • what was said
    • the date of issue
    • to whom factsheet CC/FS19 was issued, and
    • at what point in the meeting it was issued.

It is important that

  • the employer/contractor is made aware that they do not have to co-operate
  • the employer/contractor is given the opportunity to maximise the penalty abatements described in the factsheet, but that, the
  • factsheet is not issued before irregularity is discovered (except on request) as this may antagonise the employer or contractor whose PAYE or CIS performance is satisfactory.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) COG904570(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) COG905315(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)