SDLTM86630 - Compliance: Penalties

Contract settlements and abatement: Co-operation

A considered evaluation of the degree of co-operation is necessary.

The abatement given should reflect the extent to which the purchaser has been prepared to co- operate throughout the enquiry and thus help bring it to a speedy and accurate conclusion.

The time taken to reach a settlement, in so far as it has been influenced by the actions of the purchaser or his agent, will therefore be the starting point for the consideration of abatement.

It should be recognised that

• it will inevitably take longer to settle a purchaser's affairs where they are more than ordinarily complicated
• the length of the enquiry period is often influenced as much by the compliance manager as by the purchaser

Depending on the purchaser's circumstances a land transaction return may be easy or difficult to prepare. Age, health, absence or general complexity may have to be taken into account. It is not practical to lay down any fixed time limit to govern abatement.

A comparison should made between

• the time that could have been taken and that which has actually elapsed
• the co-operation which might have been expected and that which has been given

Against this background, the presence in the case (or the absence from it) of the following features should then be considered

• general delay, prevarication and procrastination
• piecemeal disclosures and truthfulness
• number of Commissioners' hearings required to force progress
• necessity of using discovery assessments or jeopardy amendments or closure notices to force progress
• use of information powers
• necessity to have the liabilities determined by the Commissioners
• irregularities continuing during the course of the investigation
• payments on account

A genuine disagreement over the interpretation of a set of facts or the statute is not a lack of co- operation, nor is an appeal for assistance from a third party including the local MP or seeking a closure notice.

However, a different view would be taken if there is a deliberate policy of obstruction, accompanied by clear evidence of attempts to mislead those authorities as well as HM Revenue & Customs.

At the end of the day the compliance caseworker will have to decide where the particular case falls on a scale ranging from full and complete co-operation to out-and-out obstruction, and then fix the abatement accordingly.

Agent delay

Any delay or lack of co-operation by the agent is deemed to be the responsibility of the purchaser. It is not uncommon for the client to be under the impression that their solicitor is attending to the details of the enquiry when in fact the latter is doing nothing or very little.

If a case is lagging because of the apparent tardiness of the agent, or the agent complains that they cannot obtain information from their client, the compliance caseworker should write directly to the client (with a copy to the agent) requesting quicker and more effective co-operation.

If a complaint is made, the answer should be that the Department is bound, in fairness to both the purchaser concerned and to other purchasers, to remind the purchaser of the effect that delay may have upon the amount of any interest and penalty which may ultimately be sought.