HMRC is to offer a disclosure facility to taxpayers, including umbrella company contractors, it suspects of fraud.
The disclosure will enable guilty individuals to disclose their fraud and in return they will be granted immunity from prosecution.
The Civil Investigation of Fraud consultation document proposes giving individuals 60 days in which to sign a contract disclosing fraudulent behaviour. After that time, a full investigation would be conducted and, not only would the taxpayer be required to pay any outstanding tax in full, they would also be charged interest and subjected to a penalty.
Furthermore, any individual who refused to sign the disclosure contract would be subject to a criminal investigation and may face prosecution.
Under this proposal, HMRC will write to taxpayers it suspects of committing serious tax evasion and people who sign the contract would be investigated using civil rather than criminal powers.
The exchequer secretary to the Treasury, David Gauke, said this proposal will help the Revenue in instances where a taxpayer genuinely wants to own up. It will also ensure that appropriate action can be taken sooner in cases where fraudsters do not admit to their crimes.
Gary Ashford from RSM Tenon, welcomed the consultation but would like to see safeguards implemented so that the Revenue cannot withdraw unilaterally from an agreement if the taxpayer is co-operating with its investigations.
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