Tax cheat check-ups: Tagging for Tax Offenders

In a new form of Tagging for Tax Offenders the taxman has said that tax evaders will face up to five years’ detailed scrutiny following an investigation; forming an additional penalty for wrongdoing. Letters have already been sent to 900 people who had previously been investigated by HMRC, stating that they are now under increased scrutiny as part of the new Managing Deliberate Defaulters (MDD) programme.

MDD aims to check the tax affairs of individuals and businesses who have deliberately evaded tax to ensure that they are complying with their tax obligations and have demonstrated a permanent change in their behaviour.

The taxman said:  “Tax cheat check-ups will involve continued and close scrutiny – it is a real deterrent. You could end up with HMRC on your back for five years”.

The level of monitoring will depend on the seriousness of the offence, but it is not envisaged that anyone will be released from the Tax Offenders Register within two years. HMRC will continue to check that returns are filed on time and that any tax that is due is paid on time, but there will also be regular reviews of defaulters’ tax affairs to check that any errors or failings have been put right. There are a variety of ways HMRC can monitor tax affairs, including:

  • Making announced or unannounced inspection visits to carry out pre-return checks of their books and records.
  • Asking for certain records so that they can be checked.
  • Requiring that additional information or documents are sent in with the person’s tax returns.
  • Conducting in-depth compliance checks into all or any part of the person’s tax affairs.
  • Observing and recording the person’s business activities and cross-checking details in their accounts. For example, the taxman may make test purchases or inspect the records of one or more of suppliers or customers.

For VAT HMRC may:

  • Require submission of quarterly or monthly VAT returns.
  • Require the same accounting periods for VAT and Income Tax or Corporation Tax.
  • May withdraw the use of certain schemes (for example, cash accounting, annual accounting, flat-rate scheme, retail schemes).

Tax evaders who fail to keep their tax affairs in order will face increasingly intrusive interventions from HMRC and if deliberate evasion continues, HMRC may also start criminal proceedings. The taxman says he will pursue deliberate defaulters that start a new business under a different name or identity.

Many people may find it bizarre that the state seems to treat trades people underpaying tax more harshly than violent criminals; but have to accept that this new “in your face” approach (as one Specialist Investigator put it) is now a reality in the UK.

How can Lynam Tax Enquiry Experts help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business.  Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997

or Andrew Nutbrown on  07718 778710