HMRC keeps up the pressure on tax cheats

Tax cheats who become insolvent to dodge their companies’ tax obligations face up to five years’ scrutiny from HM Revenue and Customs (HMRC).

Under Managing Serious Defaulters (MSD), launched today, HMRC will closely monitor the tax affairs of more individuals and businesses who have deliberately evaded tax for up to five years. From 1 April, HMRC is extending the close monitoring of the tax affairs of those who deliberately choose not to pay what they owe. MSD will ensure that they comply with their tax obligations and permanently change their behaviour.

MSD replaces and expands the Managing Deliberate Defaulters (MDD) scheme, which was launched in 2011 and aims to keep tax cheats on the straight and narrow through close monitoring. Early indications suggest that those monitored are changing their behaviour. This has led them to disclose concealed income and amend previous tax returns.
 
MSD will include evaders who:

• have received a civil evasion penalty for dishonestly evading VAT; or
  
• are required to give a security deposit for VAT, Environmental Taxes, PAYE or NICs; or
  
• become deliberately insolvent as a way of dodging their business taxation obligations.
  

David Gauke, Exchequer Secretary to the Treasury, said:

“Increasingly, evaders are using contrived insolvency to evade tax, either through liquidation of a business or bankruptcy of an individual. It is only fair that someone who has deliberately tried to evade tax should face extra scrutiny from HMRC.

“This measure, along with those announced in the Budget, demonstrates that we will crack down on people who don’t pay what they owe.”

Jennie Granger, Director General Enforcement and Compliance at HMRC, said:

“HMRC monitoring has proved effective in making tax cheats comply with their tax obligations. MSD will keep the pressure up on even more defaulters.”

Extra scrutiny under MSD can include:

• unannounced visits by HMRC
  
• asking for records so they can be checked
  
• carrying out in-depth compliance checks into persons tax affairs
  
• observing and recording business activities and cross-checking details in accounts.
  

Defaulters who fail to keep their tax affairs in order may face criminal proceedings.

More information can be found here

Notes for editors

1. Over 3,000 evaders had been placed in MDD since it was launched in February 2011. These evaders will continue to be monitored under the MSD programme.
2. MSD applies equally to businesses, large and small, and individuals.
3. Follow HMRC on Twitter @HMRCgovuk
4. HMRC’s flickr channel www.flickr.com/hmrcgovuk