HMRC Beefs Up Campaign Against Point-of-Sale Fraud

HMRC is sending ‘nudge letters’ to small businesses that it suspects of misusing their till systems to evade paying tax on sales.

The letters suggest that a taxpayer in receipt of a letter “should notify HMRC of any undeclared income within 30 days of the date of the letter”. This can be done using the Revenue’s online disclosure facility. If HMRC accepts the declared information it will calculate the tax due and agree a payment schedule. If HMRC does not agree it will contact the taxpayer in the first instance, and may also start a civil or criminal investigation. HMRC’s letter also explains that, for some taxpayers, using the contractual disclosure facility (CDF) might be the better option.

The CDF is only suitable for taxpayers who want to admit to tax fraud. By entering the CDF, the taxpayer will:

· admit that their deliberate conduct has brought about a loss of tax;

· tell HMRC about all the tax losses brought about by their deliberate conduct;

· give as much detail as they can within 60 days of being offered the contract;

· provide additional details, in the form of a report, following the 60-day period which includes a statement that they have given HMRC complete and accurate details of their deliberate conduct.

In turn, HMRC will agree not to investigate with a view to bringing a criminal prosecution for the deliberate conduct the taxpayer admits to in the CDF contract.

The tax authority also warns recipients of the letter that they will take further action if they do not come forward. This could mean:

· a full audit of the business;

· a civil or criminal investigation; or

· sending an assessment of the tax HMRC believes is owed, including interest and penalties.