Civil Investigation of Fraud (Code 9): historical record: managing the disclosure process: nature of the 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 a disclosure report. This is usually done at a separate meeting with the advisor shortly after the opening meeting.
- There is no set format for a disclosure report.
- The content, format and structure of the report is dictated by the nature and demands of each case.
- There is no reason why a single disclosure report should not be prepared where indirect taxes and direct taxes are at risk.
- HMRC does not tell taxpayers what to disclose. That is entirely a matter for the taxpayer.
- HMRC does not ‘agree’ a period for the disclosure report to cover. The period to be addressed in the disclosure report is the period (This content has been withheld because of exemptions in the Freedom of Information Act 2000) in which fraud has occurred. It is for the taxpayer, with the adviser’s help, to disclose this.
- For direct taxes, often the initial period which is looked at may be altered as the investigation proceeds. Usually the conclusion of the investigation period is the date of the last accounts sent to HMRC. Later periods in which frauds occurred may be dealt with by drawing up true accounts from the start, though the whole matter may be agreed comprehensively by HMRC.
- For indirect taxes such as VAT, if the fraud continued post challenge there is nothing to stop irregularities in these subsequent returns being captured in the Disclosure Report.
- It is for the professional adviser working with the taxpayer 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 taxpayer.
- Certain matters should be present in all reports. There ought to be a narrative explanation of what has gone wrong, a quantification year by year of true income and gains for all periods for which there has been an under-declaration, and a certificate signed by the taxpayer adopting the report as a full disclosure in response to the CIF statement (see TTOG10075 - Appendix 15). Almost invariably a Statement of Assets at an agreed date (standard form MS142) and Certificates of Bank etc. accounts operated (seeTTOG10050 - Appendix 10) and Certificates of credit/debit cards operated (seeTTOG10055- Appendix 11) will be required from taxpayers who have participated in or benefited from the frauds disclosed by the report.
- 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. The Investigator needs to be satisfied that the report is proceeding properly.
- Investigators do give limited general advice when they make progress visits. It is in no one’s interest that a report is delayed or that plainly unnecessary work undertaken, but great care must be taken not to disclose HMRC’s concerns or to act in a way that could suggest that HMRC is investigating in tandem with the outside adviser.