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Tax

Tax evasion deal value up 25%

The amount of extra tax collected by HM Revenue & Customs (HMRC) through agreements with tax evaders that give immunity from prosecution increased by 25% to £119.4m in the year to 31 March 2020.

This up from £95.8m in 2018/19, according to figures obtained by law firm Pinsent Masons.
The group said If HMRC suspects a taxpayer of tax evasion they can offer the opportunity to enter into a contract under the Contractual Disclosure Facility (CDF).

Alternatively, a taxpayer who wants to admit tax evasion that HMRC has not discovered can apply to HMRC to make a voluntary disclosure using the CDF.

The CDF gives the taxpayer immunity from criminal investigation in return for making a full, complete and accurate admission of tax evasion and paying back any money that is owed.

A wide range of taxpayers can use these agreements, from ultra-high net worth individuals with complex offshore tax affairs through to people on average incomes who only owe small amounts of tax.

Steven Porter, a tax expert at Pinsent Masons, said: “Using the CDF has benefits to both sides – taxpayers avoid prosecution and HMRC saves time and money.

“If a taxpayer meets their side of the deal under the CDF and makes a full disclosure, then they will also face significantly lower penalties than if they waited to get caught. Taxpayers may also avoid being publicly ‘named and shamed’ as a tax evader.”

HMRC investigations are expected to pick up as the UK government seeks more tax revenue to pay for the cost of coronavirus-related economic assistance.

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