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Tax cheats to be 'monitored' under new HMRC check-up plans
Posted Mar 2, 2011
The Managing Deliberate Defaulters Programme (more information here) has been created as part of the Coalition's efforts to clamp down on tax evasion.
Selected individuals and businesses who are deemed by the authorities to have 'deliberately' understated their tax liabilities, are to be closely monitored for up to five years to ensure they are not tempted to re-offend. Individuals will have to provide extra information on their self assessment tax returns.
How can HMRC monitor defaulters' tax affairs?
Some of the tools available to the tax authorities include:
- Making announced or unannounced inspection visits.
- Requiring that additional information or documents are submitted.
- Conducting in-depth compliance checks.
- Observing and recording the person's business activities and cross-checking details in their accounts.
- Require the same accounting periods for VAT and Income Tax or Corporation Tax.
- HMRC may withdraw the use of certain schemes if they think it is necessary for the protection of tax revenues.
Controversially, where taxpayers have deliberately evaded tax of more than £25,000, HMRC now have the right to publish the person's name and other details.
How are contractors affected?
While individual contractors are unlikely to be targeted by this particular scheme, it is further evidence of HMRC's determination to clamp down on tax evasion.
Other measures of interest to the contracting community include the via the Finance Bill 2011, and the introduction of Business Record Checks from the second half of 2011 onwards.
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