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HMRC internal manual

Fraud Civil Investigation Manual

Where CDF offer is made 30 June 2014 onwards: managing the detailed disclosure process: action at meeting when an Outline Disclosure indicates a detailed report is required

When your review of the Outline Disclosure points to a more detailed Disclosure Report being required, then at any meeting with the customer the objective is to:

  • clarify and address all your concerns about the Outline Disclosure and, if necessary, get a general explanation of what is wrong with the accounts and returns
  • where necessary, seek a further disclosure in respect of any fraud that you suspect, but which has not been covered by the Outline Disclosure
  • obtain a more detailed explanation of the period and amounts involved
  • question the customer about their business affairs
  • question the customer about their private affairs
  • where necessary, to get the customer’s commitment to provide a more detailed disclosure report, and, if appropriate, to appoint someone to prepare this on their behalf
  • obtain the customer’s agreement that the report will also address any other errors and tax irregularities
  • make sure the customer understands that they are responsible for the report
  • make sure there is a clear understanding of the arrangements for the submission of the report, including an agreed timetable for the submission of the disclosure report
  • check that the customer understands what will happen if there is any delay or a subsequent withdrawal of their cooperation
  • where necessary, ask the customer to complete bank and general mandates
  • make sure the customer understands the potential consequences of making an incomplete or false report
  • emphasise the importance of the certificates that will be provided (both with the report and the Certificate of Full Disclosure to follow at the end of the investigation)
  • obtain a commitment from the customer to provide access to business and personal records - and possibly access on the day
  • obtain the customer’s and accountant’s agreement to access link papers
  • obtain a payment on account.

This may be your only opportunity to meet the customer so you need to make sure you cover everything you need for the purposes of progressing the investigation.

It is most important that everything is done to make sure that the customer understands the absolute importance of making their disclosure full and complete. The notes of the meeting should reflect fully what is said by the investigator, the customer’s response and adviser’s comments.

The Outline Disclosure will give you a clear indication of what is being disclosed in response to COP9. However, some advisers might suggest that at this stage their client is under no obligation to provide a broader explanation of any irregularities and that HMRC loses nothing if everything is covered in the detailed disclosure report.

If during the meeting there is any resistance to providing answers to your questions or giving a more detailed indication of their disclosure, do not suggest that their refusal to do so inevitably puts the customer into the category of those who do not wish to cooperate. However, this is not acceptable, and you should remind the customer that within the terms of the offer that HMRC has made, under a Contractual Disclosure Facility (CDF) is an expectation that they will cooperate fully with your investigation. In return HMRC gave an assurance not to criminally investigate them for any frauds that are disclosed in the Outline Disclosure.

Your investigation addresses all irregularities, strictly speaking without limit of time, but in practice you will only review liabilities for a maximum period of twenty years. Other customers and past advisers may be involved and you may have to secure documents and protect an assessment position. You cannot make a proper judgement about the true extent of the problem, or secure a reasonable payment on account position, without a general explanation of what has gone wrong.

Where the Investigator believes that it is reasonable to do so, they must press for the information needed to establish more precisely what is being disclosed. This is important and central to the spirit of the CDF.