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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
, see all updates

Penalties: culpability: fraud and fraudulent conduct

There is no need to attempt to distinguish between ‘fraud’ and ‘fraudulent conduct’.

The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied. Fraud (in relation to HMRC) includes, in its various forms, falsification with an intention to deceive and this may be present even as a mere conscious understatement in, or omission from, a return or accounts.

Any falsification may be consciously planned with the clear intention of deceiving and cheating HMRC by, for example, the omission, manipulation or invention of figures, or other records. This may require consideration by Specialist Investigations (SI), see EM0361 and even, possibly, the institution of criminal proceedings.

In all cases where you suspect fraud, you must consider whether the case must be referred to the Evasion Referral Team (ERT), see EM0303.

If you are dealing with an inaccurate return for a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will consider whether the behaviour giving rise to the inaccuracy was careless or deliberate, see CH81100+.

CH81150 and CH81160 give further guidance.