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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 30 June 2014 onwards: penalties and settlement of cases: reduction or abatement of penalties where no detailed disclosure report made

Unless a full disclosure of all irregularities is made at the first opportunity, once HMRC has opened any check or investigation into that person’s tax affairs, they cannot earn a full reduction. For cases involving a deliberate penalty the customer will be potentially considered for the Publishing Details of Deliberate Defaulters (PDDD) programme unless they have earned a full reduction. Other criteria will also apply, see FCIM209050.

HMRC policy in relation to the investigation of fraud under COP9 is to allow a large reduction of penalties in return for full cooperation from the outset. It therefore follows that in those cases where a detailed Disclosure Report is not completed, the disclosure reduction must be significantly less.

Failure to complete a detailed Disclosure Report will clearly fail to earn maximum reductions for ‘helping’, it will also fall short of what is expected for ‘telling’ and for ‘giving access’. Even if your investigations do not uncover anything beyond that mentioned in the Outline Disclosure, the customer should have undertaken the work necessary to provide assurance about the scope of the Outline Disclosure. Merely giving full access to records is also less valuable in COP9 cases if it is not accompanied by the sort of analysis of those records that is expected in a detailed Disclosure Report.

CH82430 says that the 30:40:30 ratio is ‘a guide’ and CH82431 says that you should consider whether the disclosure reduction is reasonable, taking into account all the circumstances of the case.

For ‘Old Penalties’, the abatement for both disclosure and cooperation will rarely exceed one-quarter of the maximum available, if a detailed Disclosure Report is needed but not completed. In a case of fraud, it is not enough for the customer to use the Outline Disclosure to tell us in broad terms what he has done, and to make available his records to us. In appropriate cases what is required is a detailed report with a high level of assurance, compiled using appropriate techniques of audit, accountancy and investigation, which should be supported by explanations etc from the customer. Anything significantly short of this is a failure to reach the standard of full cooperation envisaged by Code 9.