Calculating an excise civil evasion penalty: deciding on the level of a penalty
(This content has been withheld because of exemptions in the Freedom of Information Act 2000) COPGU Mailbox(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
In exercising discretion to reduce a civil evasion penalty, it is the Department’s policy that the trader can ‘earn’ such mitigation. The mitigation system has two main components:
- Up to 40% - for an early and truthful explanation as to why the arrears arose and the true extent of them and
- Up to 40% - for fully embracing and meeting responsibilities under the investigation procedure, by for example, supplying information promptly, quantification of irregularities, attending meetings and answering questions.
The first component is essentially about disclosure. We are giving a reduction for admissions the taxpayer makes; about the reason or reasons they knowingly did the act or acts or omission or omissions, the period of time the acts and/or omissions cover and how much the acts and/or omissions amount to.
The second component is essentially about cooperation. We are giving a reduction for the cooperation the person gives us (to the best of their ability) so as not to cause us significant extra work.
For the purposes of reducing the penalty, the criteria set above will be taken into account from when the opening letter is issued. We will also look at the behaviour during the compliance check which comes before the issue of the opening letter and, if appropriate will take this into consideration when reducing the penalty.