From the 1st April 2013, the HMRC introduced their new ‘Managing Serious Defaulters Programme’ with a revised approach to tax defaulters. They have now revised and expanded the criteria they use to define a serious tax defaulter, keeping up the pressure on current and potential tax avoiders.
The revised programme monitors tax defaulters and individuals who could now be singled out include people who have been:
• charged a penalty for a deliberate tax offence
• charged for dishonesty via a civil evasion penalty
• prosecuted successfully for a tax related matter
• required to give security for VAT, Environmental taxes, PAYE or NICs
• made insolvent and pursued for recovery by an Insolvency Practitioner
The HMRC will contact all tax defaulters who fall within the new criteria and explain the commitments they need to meet. At the very least, they will require the defaulter to submit accurate returns in a timely manner. The HMRC has also stated they may require additional information to be included with all Self Assessment tax returns.
Defaulters will be monitored on an ongoing basis with the scope of monitoring being determined by individual circumstances, however this could include the HMRC making both arranged and impromptu visits to the individual to review records. Monitoring may apply to a business if it is deemed to be a serious defaulter, in which case the monitoring may include individual directors or partners in the business. This monitoring will generally continue for a period of up to 5 years which can be a significant additional burden to the individual or business.
If the defaulter does not meet the additional requirements and continues to default or if they are considered a high risk, the HMRC could levy penalties and eventually take criminal proceedings against the individual or business.
For more information on the HMRC’s revised approach to tax defaulters, please see their section ‘Managing Serious Defaulters Programme’ at https://webarchive.nationalarchives.gov.uk/20131002141049/http://www.hmrc.gov.uk/news/tax-defaulters.htm
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This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.