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HMRC internal manual

Enquiry Manual

Opening the Enquiry: Communications: Factsheets

The general information factsheets CC/FS1 (a and c) and factsheet CC/FS15 -Self assessment and old penalty rules, explain to taxpayers how settlements are concluded.

You must always issue the relevant general information factsheet when you open the enquiry. You must also issue the relevant penalty factsheets:

  • CC/FS7a for inaccuracies
  • CC/FS11 for failure to notify
  • CC/FS15 for old Self Assessment penalties
  • CC/FS18 (a and b) for late filing, or
  • CC/FS19 for old employer and contractor penalties, whenever penalties covered by Article 6 European Convention on Human Rights (ECHR) may be likely. You must also give the taxpayer, either verbally or in writing, the Human Rights Act (HRA) message, see EM1375 and factsheet CC/FS9 - The Human Rights Act and penalties.

You must issue the relevant penalty factsheet when you have reason to believe that a penalty may be due. Normally this will be immediately after you issue the HRA message or factsheets CC/FS9 - The Human Rights Act and penalties. You need to explain to the taxpayer how their disclosure and co-operation, see EM6050 (or for periods beginning on or after 1 April 2008, where the filing date is on or after 1 April 2009, the quality of disclosure, see CH82400), affects the final charge as soon as penalties become a possibility. However you must not refer to penalties before you have good reason to believe the taxpayer’s return or accounts are incorrect. Even when you start to discuss the possibility that a penalty may be due, you should not suggest that you will charge a penalty until you have established all the relevant facts and ruled out a referral to the Evasion Management Team (EMT).

The actual issue of the penalty and HRA factsheets calls for some tact, but you must issue the factsheets

  • as soon as you have formed a clear view on the existence of a culpable understatement or potential lost revenue, and
  • before you make further enquiries.

You should give the taxpayer and agent each a copy of the factsheets and ask them to retain them. You should deal with any questions about the factsheets, but it will not usually be possible to give the taxpayer any indication of the amount of penalty which might be expected until all the facts are known, Statement of Assets has been completed and the tax has been agreed. On rare occasions all of these might be done in the same meeting in which the factsheets are given, but generally you should not put forward your views on the level of penalties until the settlement meeting.

It is particularly important in any case of suspected serious evasion that you do not prejudice any future action which Criminal Investigations might wish to take. If you suspect evasion, follow the guidance at CH301100.