MLR1PP15070 - The nature and timing of disclosure (cooperation)

In order to qualify for the penalty reduction for cooperating with HMRC, businesses must be proactive and positively help HMRC’s enquiries. It is expected that a business will comply with reasonable requests from officers, to qualify for the cooperation reduction, businesses must do more than passively co-operate, positively assisting with the intervention, helping to identify the breaches and why they occurred. Access to data, systems and staff may be needed for HMRC to fully assess the extent of any breaches of the Regulations. We would expect any business seeking this reduction to do more than simply complying with requests for information. The timing, nature and extent of the access given is important in assessing whether this discount is appropriate.

A business should give access when requested and there should rarely be a need for HMRC to use information powers or issue reminders. If reminders or the use of information powers is needed, or if the business does not provide enough assistance during interventions, they will not be eligible for the penalty reduction. If it is not possible to produce the records or relevant documents at the time of the request, the business should give reasons why this is so and make the required documents available at a date agreed by HMRC. The business should offer access to their records and documents at the earliest opportunity and agreed location. If HMRC require copies of documents, these should be provided by the business.

The extent of access to information is critical, it is the business who best knows their own records and what specific evidence will detail and explain regulatory compliance issues or breaches. Proactively providing this information to HMRC – or access to it – is likely to entitle the business to have any penalty reduced for cooperation. If relevant records or documents exist but are not offered to HMRC, HMRC should not give the cooperation reduction. However, HMRC should only seek access to records that are reasonably required for the purpose of checking compliance with the Regulations.

Other actions which may help the business in ascertaining cooperation reduction are:

  • providing all facts at the start
  • full disclosure of breaches and documents
  • providing evidence capable of verification
  • proactively opening communications/arranging meetings to discuss issues, being transparent with HMRC as much as possible
  • when meetings have been arranged, ensure meetings are effective and held when scheduled, providing as much relevant information as possible

Actions which may result in the business not ascertaining the cooperation reduction are:

  • failing to adhere to timelines given by HMRC
  • not having or failing to disclose all relevant documents to HMRC
  • unnecessary delay to the intervention and ascertaining information
  • difficulty from the business results in a Regulation 66 and/or Regulation 69 notice being issued