ECSH46050 - Policing the perimeter - operational guidance

This guidance should be read in conjunction with the technical policing the perimeter (PTP) guidance at ECSH46025 and PTP standard work instructions (SWIs) in the knowledge library.

Referral mechanisms

PTP is contacted via their mailbox when there is a suspicion that a business is trading in relevant activity whilst unregistered. Referrals can come from within EC-S, HMRC or externally. PTP will review all incoming emails and consider each one.

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PTP also review the list of businesses which have failed to complete their annual declaration via their government gateway and make contact with them to ensure the business re-registers if registration is still required.

Stages of PTP work

When conducting PTP work, a caseworker will consider (and apply if necessary) the following stages: determining relevant activity, contact and sanctions.

Stage 1 – determining relevant activity

Cases are assessed using a range of HMRC and open-source systems to establish a profile for the business.

The aim is to establish if a business is conducting relevant activity and meets the criteria for registration. This includes establishing the correct legal entity and gathering evidence to establish the trading status. 

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For further information on how to determine whether a business is conducting relevant activity, see the PTP risk SWI in the EC-S Knowledge library.

Stage 2 - Contact

Initial contact

The next step is to open a case on Caseflow, using the project ID.  See the PTP compliance SWI on how to do this. Once this is done, the business is contacted by letter.   

This letter sets out what the business must do, including warning it that it is committing a criminal offence if it is conducting relevant activity without registration.   The letter states that if the business is trading whilst unregistered, it must cease trading until it has made the appropriate registration. For approval sectors trading can commence once an application has been submitted for registration. For fit and proper sectors, relevant activity must not be conducted until the application has been approved. Whilst this letter invites the business to apply for registration, it also explains that it is not guaranteed that the registration will be approved. The business has the opportunity to provide reasons as to why it feels it should not be registered (if appropriate) or provide the details of a professional body or other supervisor that is registered with.  The letter also explains that if the business has been trading whilst unregistered it may be liable to a penalty for that period. The maximum penalty chargeable is £104,000.

Further contact

If no response is received within 14 days of issuing the letter, a telephone call will be made to the business to ensure it has been received and discuss the contents. If no response is received to the letter or phone call, a reminder letter is then sent after 30 days from the date the initial letter was issued, with a follow up telephone call made if there is no response to the reminder letter.

Where a business does not apply for registration following PTP intervention

Where the business does not make an application for registration or fails to respond to the letter and/or phone calls, the case should move to stage 3 and be considered for a sanction for trading whilst unregistered.

Where a business applies for registration following PTP intervention

Where a business applies to register for supervision with EC-S, their application is then considered by the authorisations team. Making an application to register does not guarantee that a business will be accepted onto the register. If the application is incomplete, it will be rejected and the business notified of the action it is required to take. 

If the authorisations team determine there are grounds to refuse the application, a notice will be issued to the business explaining why and any action it can take.

If the authorisations team determine that the application can be approved, the business will be notified.

Whether the business’s application for registration is approved or not, and the business has been trading whilst unregistered, a sanction will be still be considered and dealt with by the authorisations team. For further information on stage 2, please see the PTP compliance SWI in the EC-S Knowledge library.

Stage 3 - Sanctions

Where businesses have been trading whilst unregistered, EC-S will consider an appropriate sanction. The PTP team utilise the following two options:

If there is evidence that the business has, or is, trading whilst unregistered as an accountancy service provider (ASP), the team may also consider suspending any active agent codes identified.

To do so, PTP emails the Agent Maintainer team gateway with the findings and request that they suspend the agent codes, which will restrict the ASP’s ability to conduct activity on behalf of their clients.

If we impose a financial penalty for trading whilst unregistered following our intervention/enquiry, this will be considered as ‘prompted’, as the business did not make an application to be registered of its own accord. As such, the business will not receive a 50% penalty reduction as per the penalty framework.

If a business has been issued with a penalty, it is still required to register if it is conducting relevant activity. If it fails to register following receipt of a penalty, PTP may consider referral for criminal prosecution and/or further sanctions.

EC-S treat most trading whilst unregistered breaches as a civil matter, however we may consider a breach as a criminal matter depending on the circumstances.

We also support money laundering prosecutions brought by other law enforcement agency partners by conducting PTP interventions on businesses that are identified as trading whilst unregistered.          

For further information on how to action a Type 2 penalty, see the guidance in the EC-S Knowledge Library.