By Max Clarke
Letters will start to land on the doorsteps of 900 tax cheats, telling known evaders that they are now under increased levels of personal scrutiny as part of the new Managing Deliberate Defaulters (MDD) programme.
MDD will closely monitor the tax affairs of individuals and businesses who have deliberately evaded tax to ensure that they are complying with their tax obligations and have demonstrated a permanent change in their behaviour.
David Gauke, Exchequer Secretary to the Treasury, said:
“Managing Deliberate Defaulters will deter people from evading tax in the future and reassure honest taxpayers that tax evaders will be dealt with. This government has made it clear that we will not tolerate people who refuse to pay their fair share and HM Revenue & Customs (HMRC) will pursue those who bend or break the rules.”
HMRC’s Steve Hickman, said:
“Tax cheat check-ups will involve continued and close scrutiny - it is a real deterrent. If you are thinking about breaking the rules just remember, you could end up with HMRC on your back for five years.
“We have worked closely with the accountant community to develop this programme and their help has been invaluable in getting the detail right.”
The level and term of monitoring will depend on the seriousness of the offence, but it is not envisaged that anyone will be released from the programme within two years. HMRC will continue to check that returns are filed on time and that any tax that is due is paid on time, but there will also be regular reviews of deliberate defaulters’ tax affairs to check that any errors or failings have been put right. There are a variety of ways HMRC can monitor a deliberate defaulter’s tax affairs, including; making announced or unannounced inspection visits; requiring that additional information or documents are sent in with the person’s tax returns; and observing and recording the person's business activities and cross-checking details in their accounts.
Evaders who fail to keep their tax affairs in order will face increasingly intrusive interventions from HMRC and if deliberate evasion continues, HMRC may also start criminal proceedings.
Safeguards are also being put in place to ensure that deliberate defaulters do not escape scrutiny by simply starting up a new business under a different name or identity. In these instances HMRC may continue to monitor the new business.