Taxman keeps a closer eye on evaders

HMRC is to issue ‘we are watching’ notices to evaders, as part of the latest crackdown on tax cheats.

The opening stage of the new Revenue initiative Managing Deliberate Defaulters (MMD) comprises letters to businesses and individuals who have been found – either through a compliance check or as a result of a criminal prosecution – to have illegally dodged taxes of £5,000 or more.

In the first wave of correspondence, around 900 are to be told their fiscal affairs will be ‘closely monitored… to ensure that they are complying with their tax obligations and have demonstrated a permanent change in their behaviour’, said HMRC.

The level and term of scrutiny per offender will depend on the seriousness of the offence committed. The MDD’s minimum length of time is expected to be two years, while the maximum has been set at five.

The programme of measures will include announced or unannounced inspection visits to carry out pre-return checks of books and records, in-depth compliance investigations, requirement for VAT returns to be submitted on quarterly or even monthly basis, and withdrawal of the use of certain schemes.

‘Evaders who fail to keep their tax affairs in order will face increasingly intrusive interventions… and if deliberate evasion continues, [we] may also start criminal proceedings,’ said a Revenue spokesperson.

The department’s head of compliance strategy, Steve Hickman, claimed the MDD will be ‘a real deterrent’ and that it had been developed after close work between the taxman and the accountancy sector.

The Chartered Institute of Taxation (CIOT) welcomed the new initiative, but the body’s Gary Ashford warned that it is ‘crucial that HMRC get decisions right on whether errors are deliberate or simply the result of carelessness, and that… sanctions are proportionate’.

Mr Ashford, the chairman of the CIOT’s management of taxes sub-committee, went on to question whether ‘the additional information requested will help to assess whether returns are accurate.

‘For the programme to work, HMRC will need adequate human resources to analyse and make effective use of the information,’ he said.
 

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