HMRC has launched a new system designed to encourage those committing corporate fraud by way of tax evasion to come forward, without facing criminal charges.
The Financial Times reports that the “Contractual Disclosure Facility” (CDF) allows taxpayers to admit any financial irregularities and commit to putting things right within 60 days, in return for a promise by HMRC not to pursue criminal charges. This option is available to both those who are and aren’t already under investigation for corporate fraud.
The new system has replaced a previous piece of legislation that saw those admitting tax irregularities fined up to 200% of their outstanding tax. Although this may seem like a softening of the system, HMRC can choose to deny confessors the chance to use the CDF and pursue criminal prosecutions instead, which could result in unlimited prison time and fines.
A spokesman for HMRC said, “this new facility is a valuable tool, which will help HMRC in its fight against fraud”. Not everyone is convinced that this new system will be useful to HMRC, however, and suggest it may end up costing taxpayers more as there is a higher risk of criminal investigators “wasting their time looking at cases that can never be prosecuted”, according to Mike Down, head of tax risk at Baker Tilly Management Group.
It remains to be seen whether this new facility will increase the amount of people coming forward to admit to serious fraud and tax irregularities, without an absolute guarantee of immunity from criminal prosecution and a more severe punishment should the CDF be rejected.
If you have been accused of corporate fraud, we can help. David Phillips & Partners have over 25 years of experience and specialise in providing expert defence in fraud cases of all types, including tax fraud, VAT fraud and white collar fraud.