HMRC defines 'helping' test for cutting adviser-conduct penalties

HMRC has published new guidance on what counts as "helping" when a tax adviser discloses sanctionable conduct and seeks a reduction of the penalty. Helping is one of the three elements that set the quality of a disclosure — alongside telling HMRC about the conduct and giving access to recordsGOV — and it carries the largest single weight in the quality assessmentGOV.

The new page defines helping as four behaviours: giving reasonable help in providing details of the sanctionable conduct; positive assistance as opposed to passive acceptance or obstruction; actively engaging in the work to accurately quantify the tax liability of the affected clients; and volunteering any information relevant to the disclosureGOV. In judging whether reasonable help was given, HMRC must always take account of the person's abilities and circumstancesGOV, including for example any obligation of confidentiality owed to the client.

What matters is the timing, nature and extent of the help.GOV Timing runs from the sanctionable conduct to the date of disclosureGOV: there must be no avoidable delays and an active approach, with information and assistance provided as early as possibleGOV. Nature covers whether the help is useful and saves HMRC time and effort in establishing the conduct and the attributable lost revenueGOV — merely appearing helpful without producing anything of use does not qualifyGOV. Extent covers the whole investigation from start to finish and all its aspectsGOV: help given for only part of the period or only certain aspects will not earn a full reductionGOV.

The surrounding disclosure framework shows why the element matters. Once the potential lost revenue (PLR) attributable to the conduct is determined, the penalty is adjusted for whether the disclosure was unprompted or prompted and for its quality across telling, helping and giving accessGOV. The quality weights are 30% for tellingGOV, 40% for helpingGOV and 30% for giving accessGOV — so helping is the single biggest lever on the reductionGOV. But there are floors: the minimum penalty percentages are 35% of PLR for prompted disclosureGOV and 20% for unprompted disclosureGOV, and penalties cannot be reduced below those levels regardless of disclosure qualityGOV; absent a special reduction, the minimum penalty is £7,500 even with disclosureGOV.

For an adviser facing a conduct notice, the practical read is that early, active, end-to-end cooperation on quantifying client tax liabilities — volunteered rather than extracted — is the behaviour this 40% element rewards, while partial or merely cosmetic cooperation caps the reduction.

Legal basis: FA12/SCH38/PARA26(3)–(7) as amended.