HMRC has announced a quasi-amnesty for people it suspects of tax fraud. The new disclosure facility will allow those who believe they may have committed tax fraud to declare their guilt without fear of subsequent prosecution.
PAYE umbrella contractors usually have little to worry about when it comes to matters of tax – all due payments to HMRC are calculated and deducted automatically by their umbrella companies. However, some in the world of contracting, especially those who run their own limited companies, face a more arduous struggle to get their tax affairs right. HMRC’s new Civil Investigation of Fraud proposals will, if implemented, allow 60 days for individuals suspected of fraud to sign a contract admitting to fraudulent conduct. Failure to do so within the time limit will result in a full investigation, at the culmination of which all outstanding tax must be paid in full. Moreover, interest will be added and a penalty will also be charged.
However, perhaps the most unpleasant consequence of failing to “fess up” will be the real prospect of criminal investigation and prosecution.
The consultation document outlines how the process will work. HMRC plans to write to all individuals it suspects of committing significant tax evasion. Those who agree to sign the contract will be subject to a civil investigation rather than a criminal one.
David Gauke, the Treasury’s Exchequer Secretary, explained that the proposal is designed to assist those who genuinely wish to own up to wrongdoing or error. Nevertheless, the measure is not motivated entirely out of forbearance – it will help settle outstanding tax payments much faster than in cases where fraudsters fail to admit to their misdeeds.