MLR1PP9050 - Penalties Guidance: Step 7(1): Determinations of the additional starting penalty: Introduction

When we can not obtain all the details we need to calculate the additional starting penalty a determination should be made if one or more of the following circumstances apply:

• The business will not co-operate in providing the details
• The records or Accounts are not available
• It is not possible to calculate the scale charge or additional scale charge for some other reason

Where possible, determinations should be based on the number of relevant clients in the relevant period and in a typical 12 month period, if the additional scale charge is applicable, rather than on the turnover of the business. The same general principles concerning apportionments for MSB and HVDs should be applied. See MLR1PP8550 to MLR1PP8590 

Clearly the aim is to make a determination of relevant clients and not culpable turnover. The precise way these principles are applied will depend on the specific circumstances but the following specific guidance must be used to inform how the general principles in Sections MLR1PP8550 to MLR1PP8590 are applied.

Where the records are not available for genuine reasons an attempt should be made to agree a reasonable estimate of the number of clients. There must however be some evidential basis for the estimate. (This text has been withheld because of exemptions in the Freedom of Information Act 2000).

If the determination is being made because of non-cooperation by the business, then the scale charges should be based on the total number of relevant customers if this can be established. A reasonable determination of this figure could be based on the number of clients on the books. If this figure, or a reasonable estimate can be established, consideration will have to be given to the number of additional clients in the relevant period with which the business conducted transactions outside of a business relationship (a one off, single or occasional transaction). A reduction should normally be given for a number of inactive clients on the books which could be based on a percentage of clients. This will be dependant however on the business providing some degree of evidence to verify these details.

Where it is not possible to use any other method the additional starting penalty should be based on 20% of the relevant turnover of the business in the relevant period.