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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: introduction

This chapter provides guidance on recording the correct amount of compliance revenue for any employer compliance checks and broader coverage cases. It also provides an indication as to which compliance revenue is counted toward HMRC’s SO1 target (and is externally reported) and which is internally counted but excluded from SO1.

General Principles

Note: Under no circumstances can indirect tax compliance revenue be recorded on ECS.

Compliance revenue must be

  • scored with consistency
  • accuracy, and
  • supported by a clear audit trail.

Compliance revenue can be scored where you

  • proactively address an identified compliance risk for example through

    • a visit
    • written enquiry
    • telephone enquiry
    • examination of customer records (regardless of whether this was initiated by HMRC or the customer)
  • take action that results in the customer making a voluntary disclosure, or
  • take action that results in the issue of formal determinations and/or decisions

and which results

  • in additional tax/NIC/CIS being bought into charge or
  • where revenue is protected for example by rejecting invalid claims, see COG915520.

It does not include

  • centralised or routine enquiries or processes
  • routine enquiries made to a Contact Centre by a customer.

Compliance revenue should be recorded on

  • the Employer Compliance System (ECS)/Caseflow as

  • Broader Coverage (BC), see COG915530, where we recover compliance revenue that is not as a result of a full or aspect compliance check, see COG915520. Where appropriate such cases should also be recorded as an Employer amendment, see COG915560.

In all instances the correct settlement process must be followed, see COG915000 onwards.

The definition of open, closed and current years, closed and current tax periods is at COG906510 and the definition of Future Revenue Benefit (FRB) can be found at COG915640.

When working out the compliance revenue to be scored you must distinguish the

  • open years
  • closed years
  • current year and
  • Future Revenue Benefit (FRB)

as this will make sure compliance revenue is scored accurately and will assist you in understanding the guidance in the following pages.

COG915640 advises how to calculate the current year and open year adjustments and the Compliance Measures guidance explains how to calculate FRB. It is important to remember that as part of the current year calculation you will need to take into account current year adjustment requirements.

When calculating any underpayment you should

  • take account of the time limits for recovery. (COG915215 - Time Limit for recovery - Overview, COG915220 - Time Limit for recovery - Normal Time Limits (NTL) and Extended time limits, COG915225 - Time Limit for Recovery - Limitation Act 1989 and Imitation (Northern Ireland) Order 1989).
  • recover interest and penalties in appropriate cases
  • consider the de minimus limit for extending your enquiry into earlier years, see COG906090.

Where Potential Lost Revenue (PLR) is above the de minimus but exceptionally a decision is made not to seek penalties you should

  • follow the guidance at COG914155 - The Expected Offer - Who makes the Decisions?
  • make sure that part 5 of the Contract Settlement Form (CSF) is fully completed.

Where difficulty is encountered in obtaining the expected offer you should

  • follow the guidance at COG914170 - The expected Offer - Problems or
  • make a referral to the Authorising Officer COG914570 - Acceptance.