HMRC’s new Contractual Disclosure Facility (CDF) will be launched on 31 January 2012, and follows consultation with interested parties in the autumn.
Under the new facility, HMRC will contact a taxpayer, in writing, to inform them that they are suspected of serious tax fraud, and offer them the opportunity to enter into a contract to disclose that fraud. The taxpayer will need to respond to the offer to take part in the contractual disclosure facility within 60 days.
If the offer to take part in the contractual disclosure facility is accepted HMRC will agree not to criminally investigate, removing the risk of prosecution by HMRC in respect of any tax fraud or tax evasion disclosed in the contractual disclosure facility. If HMRC discover that there is a tax fraud or tax evasion that has not been disclosure as part of the contractual disclosure facility procedures then they reserve the right to undertake a criminal tax investigation for the tax evasion not disclosed to them under the contractual disclosure facility.
The tax investigation will then be carried out using civil powers, with a view to a civil settlement for tax, interest and a financial penalty.
Those who choose not to enter into the contractual disclosure facility will , according to HMRC, face a full tax investigation by HMRC – in some cases a criminal investigation with a view to prosecution.
Anyone who enters into the contractual disclosure facility but does not go on to admit and disclose fraud, will also face the possibility of a criminal tax investigation.
Taxpayers who are not under tax investigation, but who want to disclose that they have been party to tax fraud, may fill out a contractual disclosure facility form to voluntarily request that HMRC consider their suitability for a contractual disclosure facility arrangement. In these cases where an individual volunteers to take part in the contractual disclosure facility HMRC still retains the discretion to decide which cases are dealt with civilly, and which are investigated with a view to criminal prosecution.
Launching the Contractual Disclosure Facility, 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.”
Gilbert Tax can help you
For most people, the simple thought of having to deal with an Tax Investigation or disclosing tax evasion or tax fraud is so terrifying that they avoid the issue altogether and often find themselves in even greater tax investigation difficulties with higher bills than they need to. There is no need to let problems large or small with the HMRC escalate to the point where your quality of life and happiness suffer.
At Gilbert Tax, we have over eighty years experience in finding closure for clients dealing with Inland Revenue investigation and significant experience in dealing with tax amnesty schemes. We have also taken part in the consultation relating to the contractual disclosure facility.
We are skilled in negotiating with HMRC, relative to tax evasion and tax fraud, so as to avoid or limit financial penalties for the individuals or businesses who find themselves subject to a tax investigation.
For a private discussion of your tax matters, please call Gilbert Tax on 0800 734 3333 or email us at
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