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HMRC internal manual

Fraud Civil Investigation Manual

Where CDF offer is made up to 29 June 2014: managing the detailed disclosure process: breakdown in the disclosure process

In some instances a taxpayer may adopt the procedures and agree to prepare a disclosure report. However, during the disclosure process they may fail to meet deadlines and there may be little evidence that any work has been undertaken (by the taxpayer and/or their adviser) to produce a report or schedule within the timescale agreed.

We must not allow excessive time to elapse. As soon as it becomes apparent that the taxpayer will not meet the agreed disclosure timetable, you should give a strong warning that

  • the penalty reduction will be affected by delay, and
  • excessive delay will lead to HMRC taking over the investigation, with the potential for further consequences for the level of penalties.

As COP9 explains, as soon as you identify deliberate behaviour you should also make the taxpayer aware of the Publishing Details of Deliberate Defaulters (PDDD) and Managing Serious Defaulters (MSD) programmes, by sending them the factsheets (see FCIM109050 and FCIM109055).

Any assurances from the taxpayer and/or agent that they will put things back on track should not be accepted at face value. You should tell the agent that from this point onwards you will monitor the case very closely to make sure that this is being done. At the first sign that this is not in fact happening you should write to the taxpayer (with a copy to their adviser) to express your disappointment and to advise them that - unless there are good reasons why you should not do so - you will be taking over the investigation forthwith.

For HMRC to hold off commencing its own enquiries we need to be satisfied that matters are progressing towards a detailed disclosure in a reasonable period of time. The minimum assurances we would generally need are:

  • a detailed disclosure with quantification within an agreed timetable
  • details of the evidence sources and
  • a commensurate payment on account or a detailed reasonable explanation why payment is not possible at this time.

With these assurances we should be able to agree to a sensible timetable for the submission of a detailed disclosure Report. However, in appropriate cases, we would expect that more regular progress meetings will be held. When a detailed report is being compiled you should seek to be actively involved during this time to ensure that satisfactory progress is being made.

If necessary, for example the taxpayer is not assisting with the production of the report within the agreed timetable, you should press for an opportunity to meet with the taxpayer so that you can discuss your concerns with them and decide if you should take over the investigation.

Without such assurances it is difficult to be satisfied that matters are progressing towards the production of a detailed disclosure and we cannot remain inactive. We will therefore consider:

  • preparing assessments and determinations, resisting postponement applications, (see TTOG4425)
  • commencing our own enquiries (see TTOG4415)
  • if the taxpayer declines to meet with you, writing to the taxpayer to explain your concerns.