Civil Investigation of Fraud (Code 9): historical record: managing the disclosure process: action at the opening meeting when a disclosure is indicated in response to formal questions
Once it is apparent at the opening meeting that a disclosure is to be made, the objective is to obtain:
- completed responses by the taxpayer to the formal questions
- a general explanation of what is wrong with the accounts and returns
- a general explanation of the period and amounts involved
- replies to questions put by the investigator concerning the taxpayer’s business affairs
- replies to questions put by the investigator concerning the taxpayer’s private affairs
- a clear understanding of the arrangements, including an agreed timetable for the submission of the disclosure report
- completed bank and general mandates (see TTOG10000 appendices 12, 13 and 14)
- a commitment from the taxpayer to provide access to business and personal records - and possibly access on the day
- the taxpayer’s and accountant’s agreement to access to link papers
- a payment on account.
It is most important that everything is done to ensure that the taxpayer understands the absolute importance of making any disclosure in response to CIF is full and complete. The notes should reflect fully what is said by the investigator, the taxpayer’s response and adviser’s comments.
You should do nothing to suggest that HMRC can dictate the taxpayer’s response to the formal questions even where the taxpayer is indicating that a disclosure will be made. You must emphasise that the formal questions are capable of simple ‘yes’ or ‘no’ answers, and make it clear that it is entirely a matter for the taxpayer to decide how he or she responds to the formal questions.
Ideally written replies to the questions should be given immediately a disclosure is indicated. These may be detailed but a simple ‘one word’ format is expected.
Even when a disclosure is being made advisers sometimes ask for time to be given to complete the written responses. Up to 10 working days can be allowed, but Investigators must make sure even in cases where a full disclosure is apparently being made and full co-operation provided that the properly completed responses are received.
Where an admission is made of irregularities at the opening meeting the taxpayer should be invited to describe in general terms what is wrong with the accounts and returns he or she has submitted. He/she is expected to indicate the amounts and period involved, to the best of their knowledge and belief.
If there is resistance to giving an initial indication of the disclosure at the opening meeting, do not suggest that a refusal to give a general explanation at the opening meeting inevitably puts the taxpayer into the category of those who do not wish to make a disclosure.
Some advisers suggest that the taxpayer is under no obligation to make a general disclosure at the opening meeting and that the HMRC loses nothing if everything is contained in a comprehensive disclosure report. This is not acceptable. The fact is that our position may be prejudiced if there is no immediate general explanation of what has gone wrong. The CIF procedure addresses all irregularities. Other taxpayers and past advisers may be involved. The HMRC may have to secure documents and protect an assessment position. A proper judgement cannot be made of the payment on account position without a general explanation of what has gone wrong at the earliest opportunity.
The Investigator must press for at least an outline of what is being disclosed as being important and central to the spirit of the CIF procedure.