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HMRC Launches New Indirect Tax Fraud Probe Guidelines

by Jason Gorringe, Tax-News.com, London

05 September 2007


HM Revenue and Customs has this week announced the Introduction of Public Notice 160, which sets out the procedure for civil evasion penalty enquiries for indirect taxes outside of Code of Practice 9 (2005).

Code of Practice 9 (2005) is used by HMRC for investigating suspected serious fraud against the Exchequer, where for policy or operational reasons, it is considered inappropriate to launch a criminal investigation. When HMRC employs Code of Practice 9 (2005), the investigation will cover all taxes.

Because of the costs to the taxpayer and time involved in producing a comprehensive disclosure report it is impractical to employ Code of Practice 9 (2005) for lower value cases, especially where those cases only involve a single tax.

The new procedure launched on September 1 will only be operated by appropriately trained staff in designated teams, and is designed to be used in lower value cases where there is evidence of dishonest conduct.

The key features of this procedure are that:

  • The taxpayer will be notified that they are suspected of conduct involving dishonesty.
  • HMRC will disclose the matters that are subject to enquiry - eg sales or purchases in a particular VAT return period, but not the specific evidence that has led it to suspect dishonest conduct.
  • The taxpayer will also be invited to co-operate with HMRC enquiries, and to tell the tax authority about any irregularities, as co-operation and disclosure can earn reductions from a maximum penalty of 100%.

This procedure will only be used where HMRC has evidence that leads to a suspicion of dishonest conduct.

Further information on this type of enquiry can be found in the Tax News Resources section.

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