By Lyndsey Hall
On March 27th the Revenue announced a new monitoring program for serious tax defaulters, replacing the old program of “managing deliberate defaulters”.
The new scheme began on April 1st, and targets people who have been:
- successfully prosecuted for tax matters in the past, or had a civil evasion penalty imposed;
- charged a penalty under tax legislation for deliberate misconduct;
- required to give security as a guarantee against future default;
- subject to previous recovery action by an insolvency practitioner;
- or identified during a civil fraud investigation as being high risk.
There is no fixed minimum value for those defaulters who will be monitored via the new scheme, but HMRC will prioritise the most serious cases of prior misconduct.
People who are likely to be put on the new monitoring program will receive a letter from HMRC advising them, and although there is no appeal process, they will have the right to complain due to unfairness. The monitoring method will vary depending on the circumstances of the default, and will, at the very least, involve meeting all the usual obligations of timely, accurate returns or registrations.
It is also likely that more detailed information, such as a full balance sheet, will be requested from the defaulters. HMRC will also look more closely at the financial affairs of those involved, focussing on the areas where there have been problems previously, and will make both announced and unannounced visits to the taxpayer to check on records. Monitoring will last until HMRC are satisfied that the defaulter is no longer a high risk of deliberately returning incorrect tax information. There is no maximum period, but this will usually be between two and five years.
The new monitoring scheme will apply to businesses where they are serious defaulters, and can extend to individual directors and officers of a company, and partners, provided they are also defaulters. If a business ceases trading then the monitoring can transfer to the individuals behind the business, and successive businesses where the old business was a serious defaulter.
It has never been more important to have your financial affairs in order. If you or your business require any assistance with your finances, leave a comment or give us a call and we will be happy to discuss your situation and offer some impartial advice.
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