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HMRC internal manual

Fraud Civil Investigation Manual

From
HM Revenue & Customs
Updated
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Where CDF offer is made up to 29 June 2014: verifying the disclosure: submission of a detailed disclosure report

In appropriate cases, we would expect a more detailed Disclosure Report to be submitted so that we can establish the full extent of the fraud and irregularities included in the Outline Disclosure. Any detailed Disclosure Report should comprise a written narrative giving details of business activity, how the fraud was carried out, the individuals involved, their roles and responsibility and an explanation of how any arrears arose.

The detailed Disclosure should be supported by a schedule detailing the extent of the undeclared income, profits or gains, sums subject to Inheritance Tax, VAT etc. It should also include all the relevant supporting documents and explain the methods behind how any arrears were calculated. Where the taxpayer’s records are incomplete a best estimate of the undeclared income, profits, gains etc will have been used to make the Outline Disclosure and the detailed Disclosure should also highlight any estimates that have been used. Generally speaking, any estimates should not be accepted without the taxpayer being asked to justify them.

A calculation of the interest payable should also be included, which must take into account any increased liabilities on the payments on account that should have been made for subsequent years.

The taxpayer should offer a penalty in the disclosure, based on their interpretation of the legislation or after discussion with HMRC. The Report should provide an explanation of the mitigation applied to arrive at the penalty being offered.

In addition to providing the following certified documents it is expected that the taxpayer will certify the Report and adopt it as being correct and complete:

  • a certificate of bank accounts operated
  • a certificate of credit cards operated
  • a statement of worldwide assets and liabilities at agreed dates.

These three certificates form part of the ‘formal disclosure’ which is required in every CDF case, whether or not a detailed Disclosure Report is made. The fourth element of the formal disclosure is a witnessed, signed and dated Certificate of Full Disclosure (CFD). The HMRC template must be used and any amended certificates will not be accepted. The CFD should not be sent with the detailed Disclosure, but would be required once the additional liabilities have been agreed.

It is a matter for the taxpayer as to whether they or their representative prepare and submits the report. Any Disclosure that is headed ‘“Without Prejudice” should not be accepted.