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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: penalties: things to consider under seriousness

You should

  • always think about what seriousness means as explained in COG914120.

Some examples for consideration are

  • The size and extent of the inaccuracies in terms of the amounts involved and their frequency. For example significant sums paid frequently would be more serious than lesser ‘one off’ payments.
  • The scale of the inaccuracy in relation to the employer’s overall payroll. For example inaccuracies of £4,000 in a year where the payroll figure was £15,000 would be viewed more seriously than where the payroll figure was £1 million.
  • The total amounts in relation to the annual remittances made to the Accounts Office. For example a total underpayment of £5,000 would be viewed more seriously where an employer’s annual remittances to Accounts Office are £40,000 than where the annual remittances were £540,000.
  • The total amount of culpable liability. Is this in any context a large amount? For example £1 million is certainly a sizeable loss to the Exchequer even if it is only 2% of the annual payroll.
  • The total amounts paid to individuals. For example where amounts totalled 25% of an employee’s pay this would be considered more serious than payments which totalled only 3%.
  • The nature of the inaccuracy. For example where there is untaxed overtime or bonuses this is considered more serious than untaxed home to work fares.
  • How long the inaccuracies continued and their frequency. For example an employer who used untaxed casual labour every week would be viewed more seriously than one who had used them in a ‘one off’ situation.
  • The range of inaccuracies. For example one single inaccuracy which is attributable to simple negligence is less serious than six similar inaccuracies.
  • Why the inaccuracy took place. For example did the employer know the sum was taxable and tried to conceal it or was it a simple muddle?