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HMRC announces new plan to target tax evaders
People who persistently evade tax will have their tax affairs scrutinised more closely following the launch of a new scheme by HM Revenue and Customs (HMRC).
Under the Managing Deliberate Defaulters (MDD) programme, individuals who deliberately dodge tax will be subject to detailed inspection for up to five years as part of a crackdown by HMRC.
The Revenue said it does not envisage that anyone will be released from the scheme within two years.
Letters are currently being sent to 900 known tax evaders, although the plan is supposedly aimed at deterring would-be tax dodgers as well.
‘Tax cheat check-ups will involve continued and close scrutiny - it is a real deterrent,’ said Steve Hickman from HMRC. ‘If you are thinking about breaking the rules just remember, you could end up with HMRC on your back for five years.’
There are a variety of ways HMRC can monitor a deliberate defaulter’s tax affairs. These may include:
- making announced or unannounced inspection visits to carry out pre-return checks of their books and records
- asking for certain records and additional information to be sent in with the individual’s tax return so that they can be checked
- conducting in-depth compliance checks into all or any part of the person’s tax affairs
- observing and recording the person's business activities and cross-checking details in their accounts
- requiring more frequent VAT returns or withdrawing certain favourable VAT schemes such as cash accounting, annual accounting, flat-rate scheme and retail schemes
HMRC has also warned that it may start criminal proceedings if miscreants reoffend.
The move is the latest in a string of measures apparently designed to recoup lost tax revenue. From April 2011 harsher penalties will apply for offshore non-compliance, with offenders facing penalties of up to 200% of the tax owed.
In addition, those who have tried to dodge tax of more than £25,000 will start to be named in the coming tax year.