IHTM36142 - Investigating incorrect accounts, information or documents: initial action in Compliance Group

This instruction should be applied by Compliance Group Investigators making penalty enquiries when there is an incorrect account, information or document ( IHTM36101) and the additional tax exceeds the de minimis limit ( IHTM09083) for considering a penalty.

When considering a penalty enquiry on your own case or on a case referred to you, you should first carry out your own risk assessment ( IHTM36144) to decide whether, on the basis of the information to hand, the possibility of a penalty should be further explored. If the possible penalty involves an undervaluation you should consult with the valuers ( IHTM36143) before taking a decision to contact the taxpayers.

Even if a penalty is inappropriate a penalty record must still be created on COMPASS ( IHTM36373). For cases referred to you, you should return the file to the original caseworker with instructions to record the fact that a penalty will not be pursued on COMPASS and continue with the case. For your own cases, follow the procedures to create a penalty record ( IHTM36373) and to record that a penalty enquiry was not taken up ( IHTM36375). This also applies to Risk Assessment team members who send a case straight back themselves without allocating it.

If a penalty enquiry is appropriate you should raise your enquiries with the taxpayers as soon as possible after the discovery of the omission or undervaluation. You should also take the following action

• set up an enquiry on ERS ( IHTM29105) (if this has not already been done)
• create a penalty record on COMPASS ( IHTM36373)
• raise enquiries ( IHTM36151) with the taxpayers
• issue leaflet IHT 13 ( IHTM36156)
• note on the file cover the time limit ( IHTM36108) for taking the penalty.

If you suspect that there may be fraud ( IHTM36291) you should follow the separate instructions ( IHTM36293) for dealing with potential fraud.