Member Article

HMRC welcomes self-disclosure to avoid criminal prosecution

HM Revenue & Customs (HMRC) has introduced new procedures for civil fraud investigations.

The new Contractual Disclosure Facility (CDF) was launched on 31 January 2012, which follows consultation with interested parties during Autumn 2011.

The new procedures will see HMRC writing to taxpayers to inform them that they are suspected of serious tax fraud, and to offer them the opportunity to enter into a contract to disclose that fraud within 60 days. In return for doing so, HMRC will agree not to criminally investigate the taxpayer for the fraud, which will of course remove the risk of prosecution.

HMRC will then investigate the matter using their civil powers, with a view to settlement for the amount of tax owing, any interest and a financial penalty.

HMRC have indicated that if those suspected of tax fraud choose not to use the CDF process, they may face a full investigation. In some cases it may be a criminal investigation with a view to prosecution. They have also indicated that anyone who signs the contract, but does not go on to admit and disclose fraud, will also face the possibility of a criminal investigation.

David Gauke, Exchequer Secretary to the Treasury, said: “This new facility is a valuable tool which will help HMRC in its fight against fraud. HMRC will set out clearly what is expected of taxpayers, and what will happen to fraudsters who choose not to disclose their crimes.”

Andrew Swan, financial crime solicitor at Short Richardson and Forth LLP commented: “This is a major step by HMRC in tackling tax fraud. I expect to see a significant increase in the number of both civil and criminal cases for tax evasion over the next few years, as HMRC increase their investigative resources”.

This was posted in Bdaily's Members' News section by Andrew Swan .