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HMRC internal manual

MLR1 Penalties Guidance

Penalties guidance: MSBs/HVDs: calculating the culpable turnover: considering determinations

If the culpable turnover can not be calculated satisfactorily using these methods a determination of this figure should be made for the purposes of calculating the penalty. .

A determination can only be replaced by an accurate and verifiable calculation of the culpable turnover. This can be sent to us at any stage between the date of the Compliance Visit and 30 days from the date we issue a pre-penalty letter saying we are going to issue a penalty. This can be extended if there are reasons to justify this providing we are informed before the 30 day period has expired. Pre-penalty letters are fully explained in MLR1PP11050.

A determination should be made under one or more of the following circumstances:

  • a business will not co-operate in providing the details we need
  • the records or Accounts are not available
  • it is not possible to calculate the culpable turnover for some other reason

If a determination is necessary it should be made using the following methods. These should normally be applied in the order they are set out but on some occasions a combination of more than one method should be used when this is appropriate. When a determination has been made, the basis for the determination and any documents that have been used to verify the figures, must be recorded by Compliance Officers.

A determination can be replaced with the accurate figures, if these are subsequently provided, in a form that can be verified. Businesses should normally submit these within 30 days of the pre-penalty notice being issued.