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HMRC launches new Contractual Disclosure Facility

HMRC launches new Contractual Disclosure Facility

Contractors and freelancers may be interested to learn that HMRC intends to introduce stricter procedures for dealing with investigations into civil fraud at the end of this month.

The coalition is committed to tackling tax avoidance, evasion and fraud and on the 31st January it will launch a new Contractual Disclosure Facility.

Under the CDF, the Revenue will write to taxpayers suspected on committing a serious tax fraud, and inform them that they have 60 days in which to enter into a contract and disclose the fraud. If the taxpayer accepts the offer, they will be immune from a criminal investigation and possible criminal prosecution. Instead, any investigation will be conducted using civil powers, and a civil settlement will be agreed for the repayment of tax, interest and penalty charges.

However, taxpayers who ignore HMRC’s CDF offer will be subject to a full Revenue investigation and this could lead to a criminal prosecution. Furthermore, if a taxpayer signs the CDF but then reneges on the promise to disclose the fraud, he or she will also face the risk of a criminal investigation.

Taxpayers who are not the subject of an investigation, but want to come forward voluntarily and admit to a tax fraud can ask HMRC to consider whether they are suitable for a CDF arrangement. In those circumstances, the Revenue will still retain the right to decide whether the case is dealt with civilly or becomes the subject of a criminal investigation.

David Gauke, the exchequer secretary to the Treasury, said the CDF will be a valuable tool in HMRC’s fight against tax fraud. Taxpayers will know exactly what is expected of them and what will happen to those who choose to hide behind their crimes.

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Image: Challenge #4 Open Mouth by Pawns

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