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HMRC internal manual

Fraud Civil Investigation Manual

HM Revenue & Customs
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Where CDF offer is made 30 June 2014 onwards: managing the detailed disclosure process: nature of the detailed disclosure report

Even where an experienced adviser is present it is often helpful for the smooth progress of the case to outline what HMRC expects to see in the detailed disclosure report (see FCIM206060). This can be done immediately after the meeting with the customer. The customer should be encouraged to attend, as this will give them a much better understanding of what is required and why. It will also get them more involved in the process.

You should make sure you explain:

  • There is no set format for a disclosure report.
  • Generally, the content, format and structure of the report will be dictated by the nature and demands of each case.
  • A single report should be prepared to cover all taxes and all entities where taxes are at risk.
  • HMRC does not tell customers what to disclose. That is entirely a matter for the customer. However, you should make sure that all your concerns are being addressed, see FCIM205010. If this is not the case then a report will not be the right solution and you will take over the investigation, as there is no point in waiting for a report that you know will be inadequate.
  • HMRC does not ‘agree’ a period for the disclosure report to cover. The period to be addressed in the disclosure report is the period (theoretically, without time limit - in practice up to 20 years) in which fraud has occurred. This should have been disclosed in the Outline Disclosure.
  • It is for the professional adviser working with the customer to undertake such investigation as is needed so that all matters can be disclosed.
  • The professional adviser will decide the detail of how matters are to be presented in the report, but facts always remain the responsibility of the customer.

However, certain matters should be present in all reports:

  • a written narrative giving details of business activity, how the fraud was carried out, the individuals involved, their roles and responsibilities and an explanation of how any arrears arose
  • a schedule year by year, period by period detailing the extent of the undeclared income, profit or gains, sums subject to Inheritance Tax, VAT and so on
  • a certificate signed by the customer adopting the report as their full disclosure, see SEES forms and letters
  • a Statement of assets at an agreed date, see EM3540
  • Certificate of bank accounts operated, see SEES forms and letters, and
  • Certificate of credit and debit cards operated, see SEES forms and letters.

These will be required from customers who have participated in, or benefited from, the frauds disclosed by the report. These last three comprise part of the ‘formal disclosure’ which is required in all cases.

It is not HMRC’s wish to see unnecessary work undertaken and costs incurred in the preparation of the disclosure report. It is the adviser’s responsibility to make sure that costs are kept to the minimum, consistent with the requirements of a full disclosure.

HMRC will meet the advisers during the time when the disclosure report is being prepared. How frequently will be for the investigator to decide. The Investigator needs to be satisfied that the report is proceeding properly.

When the investigator makes contact about progress of the report, they can give further limited general advice about what areas are, or are not, being considered for inclusion in the report. They must be mindful that when giving any further advice, that it is in no one’s interest for a report to include plainly unnecessary work, and which may result in the submission of the report being delayed.