A new initiative launched by HM Revenue & Customs will help taxpayers to avoid the prospect of criminal prosecution if they are suspected of serious fraud. Signing a contract and providing full details in an agreement with HMRC will avoid a criminal investigation.
The Contractual Disclosure Facility is to launch on 31st January 2012, with letters sent out by HMRC to taxpayers who they believe have committed tax fraud. The letters will contain an explanation that HMRC believe they are guilty of fraud, with an invitation to agree to a contract. Under the contract, taxpayers will receive 60 days to provide details of the fraudulent activities.
By agreeing to the contract’s terms and conditions, taxpayers will be liable to pay outstanding tax which is due, plus interest and a penalty. However, the possibility of criminal investigation will be removed, leaving a civil investigation instead. If a taxpayer receives a letter under the new initiative, but chooses not to act, or signs but doesn’t comply with the conditions, they will face criminal investigation and may face prosecution. At the introduction of the new initiative, the exchequer secretary to the Treasury, David Gauke 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.”
If taxpayers are not invited to join the initiative but wish to disclose details of tax fraud, they may apply to HMRC for consideration for the scheme.
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