Under new proposals published last week, individuals, including umbrella company contractors, who are suspected of committing a tax fraud will no longer be immune from prosecution.
HMRC’s new approach will take effect from the 31st of January and will still provide immunity for individuals who admit to fraud through the contractual disclosure facility.
However, anyone who denies fraud or does not reply to an HMRC Code of Practice 9 query, could face criminal prosecution if investigators discover that they have committed fraud. Under the current regulations taxpayers are immune from prosecution in they are subject to a COP9 query.
People who decide to own up to tax evasion through the contractual disclosure facility will need to disclose all fraudulent behaviour, sign a statement confirming that they have provided all the required details and pay all the back tax, penalties and interest due.
KPMG tax partner, Derek Scott, explained that the previous procedure for Code of Practice 9 ensured that certain circumstances needed to prevail before taxpayers were prosecuted, even if they refused to cooperate with HMRC. The new regulation evens things up by threatening to prosecute those who deliberately ignore a Revenue investigation.
McGrigors director, Phil Berwick, added that it is easier for HMRC to obtain a civil settlement and in the past it has been reluctant to gamble on the success of a criminal prosecution. Now, it will have that option open to it if there is substantially proof of illegal behaviour.
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Image: Behind Bars by JoshuaDavisPhotography
