CH123407 - Offshore matters: requirement to correct certain offshore tax non-compliance: failure to correct - penalties - reductions for quality of disclosure - introduction
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH123050 for full details.
The more a person tells, helps and gives HMRC access, the more the penalty will be reduced for disclosure. This is the quality of disclosure.
To calculate the reduction for disclosure you need to consider the three elements of disclosure
- telling us about it, see CH123408
- giving us reasonable help, see CH123409
- allowing us access to records, see CH123410.
You should weight the elements of disclosure as follows
| Element of disclosure | Percentage |
|---|---|
| Telling | 30% |
| Helping | 40% |
| Giving access | 30% |
| Total | 100% |
For guidance on how to determine the quality of disclosure, see CH82431.
The principles for establishing the quality of disclosure are similar to those used under Schedule 24 FA07. For a practical example of how this works, see CH82432.
Determining the quality of disclosure
To arrive at the disclosure reduction you need to assess the quality of each of the three elements of the disclosure, see CH123408, by reference to
- timing
- nature, and
- extent.
The guidance at CH123408 provides examples of the circumstances that you will need to take into account.
When you have taken all relevant factors into account the percentage you have arrived at by totalling the three elements of the disclosure (telling, helping and giving access) will reflect the overall quality of the disclosure. Consider any representations made by the person. They may be able to offer evidence which leads you to a different view of the disclosure.
At this point you should take time to consider whether the disclosure reduction is reasonable taking into account all the circumstances of the case. But remember that the penalty percentage must sit between the maximum and minimum levels set by law.
You should then use this percentage to calculate the amount of penalty to be charged.
There will be cases where the circumstances are such that little in the way of telling, helping and access is needed to establish the reasons for the person failing to correct and the amount of any additional tax due.
You should allow the full reduction for those elements of the disclosure that are not required.
For example
If you hold reliable third party information that clearly identifies the amount of the additional tax the person need only tell you about the circumstances that gave rise to the failure to correct to qualify for the maximum reduction for ‘telling’ and ‘helping’.
This should include enough detail to give you assurance that the failure to correct is not part of a wider pattern.
If you decide that no further documentary evidence is required the person should be given the maximum reduction for ‘giving access’.
There are overlaps between the three elements of disclosure so that a single course of action may qualify for a reduction under more than one heading. Equally a failure to do something or a misleading action may result in a loss of reduction points under more than one heading.