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HMRC internal manual

Fraud Civil Investigation Manual

Where CDF offer is made up to 29 June 2014: penalties and settlement of cases: report to Authorising Officer - basis of settlement

Before the investigation can be concluded the Authorising Officer (AO) must approve the basis on which it will be concluded - either formally or by contract.

A single report (covering indirect and direct taxes) should be prepared setting out the facts, evidence established and conclusions reached during the investigation, so that the AO can agree the basis of settlement.

The penalty position should be considered separately by making a report to the AO, as all penalties must be agreed and approved by the AO. You must not enter into any discussions about the level of penalties until the AO has been consulted.

Generally speaking, penalties will have been mentioned throughout the investigation. However, the right time to agree the imposition and level of any penalty is at the conclusion of an investigation, that is when the additional tax and interest due have been agreed. Before a civil penalty can be imposed, culpable behaviour must be established. It is important that throughout your investigation you record details of the taxpayer’s behaviour, and that you make the case for seeking a penalty. The rules about what is culpable behaviour, and how to calculate the penalty, will depend on whether the periods in question are ‘Old Penalties’ or ‘New Penalties’. See FCIM109020.