TTOG11630 - Civil Investigation of Fraud (Code 9): historical record: managing the disclosure process: commissioning the disclosure report

Once a taxpayer has made a disclosure in response to the CIF procedure, and has given a general explanation of the matters to be disclosed, they should be invited to make arrangements to commission a considered report which will set out all of the irregularities which need to be disclosed to HMRC.

The cost of the preparing the Disclosure Report falls upon the taxpayer. It is not tax deductible in respect of direct taxes. This must be made clear to the taxpayer and recorded in the notes. However, in terms of indirect taxes, any VAT charged on fees in relation to business tax elements of an investigation is reclaimable through the VAT registration. VAT charged on fees in relation to personal taxes is not reclaimable through the VAT registration.

The taxpayer should specifically confirm at the opening meeting that he understands this and is prepared to commission such a report.

The cost of preparing a disclosure report can be considerable and care should be taken to ensure that HMRC does not contribute to unnecessary work. It is important that we do not mislead the taxpayer. This reinforces the importance of indicating in which tax regime(s) our suspicions are held.