CC/FS14 - Managing Serious Defaulters - HM Revenue & Customs

Compliance checks series
CC/FS14
Managing Serious Defaulters
What we mean by ‘serious defaulters’
For the purposes of the Managing Serious Defaulters’ programme, a serious
defaulter is a person who has been:
• charged a penalty for a deliberate offence under specific taxes legislation
or otherwise identified, during a Civil Investigation of Fraud, as presenting a
continuing high risk to HM Revenue & Customs (HMRC)
• successfully prosecuted by the Director of Revenue & Customs Prosecutions or
another prosecuting authority for a tax matter
• charged a Civil Evasion penalty for dishonesty
• required to give, and has given, security to HMRC as a guarantee against
potential future default, or
• against whom an Insolvency Practitioner successfully pursues a claim on behalf
of HMRC for recovery of money or assets.
We call all these people ‘serious defaulters’.
What we do if you are a serious defaulter
As well as:
• charging you any tax that is due
• charging you any late payment interest and penalties that are due, and
• asking you to give us financial security when there is a high risk that you
will not pay what you owe
we may also decide to monitor your tax affairs more closely.
We will do this through our enhanced monitoring programme called Managing
Serious Defaulters. We may also publish your details if what you did or what you
failed to do was deliberate.
You can find more information about this in factsheet CC/FS13 Publishing details
of deliberate defaulters.
Why we monitor serious defaulters
There is a high risk that serious defaulters may continue to deliberately or
dishonestly get their tax affairs wrong or not pay what they owe. Once we have
identified a serious defaulter, and brought their affairs up to date, we want to
make sure that in future they take reasonable care to get their tax affairs right.
We do this by placing them into our Managing Serious Defaulters programme,
where we will closely monitor all aspects of their tax affairs.
The aim of the Managing Serious Defaulters programme is to:
• send a clear message that we will actively pursue those who deliberately or
dishonestly get their tax affairs wrong or try to get out of paying what they owe
• deter people from deliberately or dishonestly getting their tax affairs wrong or
trying to get out of paying what they owe
• reassure the vast majority who do pay the right amount of tax that we are
committed to tackling those who deliberately or dishonestly get things wrong
or try to get out of paying what they owe.
Customers with particular
needs
If there is anything about your health
or personal circumstances that may
make it difficult for you to deal with
this matter, please tell the officer that
gave you this factsheet. Telling them
will mean that they can help you in
the most appropriate way.
For example:
• English is not your first language
• you would like us to use a certain
format to communicate with you,
for example, Braille, large print or
Text Relay
• you would like us to visit you at
home because it is difficult for you
to get to one of our offices.
For more information go to
hmrc.gov.uk/contactus/
particular-needs.htm
If you need help or
more information
If you have any questions, please
contact the officer dealing with
the check.
You can also look for the information
you need on our website, go to
hmrc.gov.uk
Authorising a representative
You can authorise someone to deal
with us on your behalf. This includes
professional tax advisers, friends or
relatives. They can deal with us just
for a compliance check, or more
permanently for your day to day
tax affairs.
If you want to authorise a professional
tax adviser, they will be able to give
you a form to complete and send to
us. If you want to authorise someone
other than a professional tax adviser,
you will need to write to tell us who
you want to authorise and what you
want them to deal with for you.
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Who we may monitor
We may monitor any individual or business who is a serious defaulter. If a business
is a partnership or a company we may monitor:
• the individual partners, directors or officers of the company who are serious
defaulters, or
• the partnership or company if
— the serious defaulters are not partners, directors or officers of the company, or
— where those partners, directors or officers of the company who are serious
defaulters could not be specifically identified.
In some circumstances, we may monitor the partnership or company as well as
individual partners, directors or officers of the company.
If a serious defaulter controls, or has a controlling interest in any other businesses,
or starts a new business, we may also monitor that business.
This includes those who start under a new name or in a new capacity, for example,
if a sole trader becomes a limited company or directors of an insolvent company
start a new company.
If a company or partnership ceases to trade, we may monitor the individuals who
had control of, or a controlling interest in it. We may also monitor the tax affairs
of any other business they control or have a controlling interest in.
What if you are unhappy
with our service
If you are unhappy with our service,
please tell the person or office you
have been dealing with. They will
try to put things right. If you are
still unhappy, they will tell you how
to complain.
There is more information on our
website, go to
hmrc.gov.uk/complaints-appeals/
how-to-complain/make-complaint.htm
This factsheet is one
in a series
For the full list of factsheets in the
Compliance checks series, go to
hmrc.gov.uk/compliance/
factsheets.htm
What we will monitor
What we will monitor will depend on what you deliberately or dishonestly did
wrong, and how much of a risk there is that you will continue to deliberately or
dishonestly get things wrong or try to get out of paying what you owe.
You will have to meet certain obligations and we will monitor you closely to
make sure that you have met them. The obligations will apply to all the taxes
we administer and may apply to any businesses you control.
You will have to meet all of the following standard obligations.
• Make sure all returns are complete and accurate.
• Make sure all returns are sent to us on time.
• Make all payments to us on time.
• Make any registrations on time.
You may also have to meet additional obligations depending on your circumstances.
For example, you may have to provide a greater level of detail with future tax
returns, such as a detailed balance sheet. We will tell you what obligations you
have to meet.
In addition to making sure that you have met your obligations, we will scrutinise
your tax returns more closely. We will also carry out further reviews to check that
any failings that have been identified have been put right.
We can monitor your tax affairs in a variety of ways and these will vary depending on
whether or not you run a business. They may include:
• making announced or unannounced inspection visits to your business to check
your business records or assets relating to your current accounting period
• carrying out a rigorous compliance check into all or any part of your tax affairs.
If we find that you have continued to deliberately or dishonestly get things
wrong or get out of paying what you owe, we may charge you (further)
penalties or take criminal proceedings against you.
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How and when you will know if we are going
to monitor you
If we decide to put you into the Managing Serious Defaulters programme we will
write to tell you.
When we write, we will explain what obligations you are required to meet.
We will decide whether to put you into the programme once we have completed
any actions we have taken to deal with your default.
If you have made a voluntary disclosure of what you deliberately did wrong and we
have decided not to carry out a compliance check or other investigation, we will tell
you whether we intend to put you into the programme once we have dealt with
your disclosure.
If you have a criminal conviction for tax offences we will decide whether to put you
into the programme after you have been convicted.
If you have had to give security, or if an Insolvency Practitioner has brought a claim
against you for recovery at our request, we will tell you whether we intend to put you
into the programme once the security has been given or the claim successfully made.
How long the monitoring will last
We will continue to monitor your tax affairs until we are satisfied that there is no
longer a high risk that you will continue to deliberately or dishonestly get your tax
affairs wrong, or try to get out of paying what you owe.
For most people, monitoring will last for between two and five years.
When we are satisfied that we no longer need to closely monitor your tax affairs,
we will tell you this in writing and remove you from the Managing Serious
Defaulters programme.
Your principal rights and obligations
• You have the right to be represented. You can appoint anyone to act on your
behalf. This includes professional advisers, friends, relatives and so on.
• You have the right to consult your adviser. We will allow a reasonable amount
of time for you to do so.
• We will protect information we obtain, receive or hold about you.
• We can only ask you for what is reasonable for us to carry out our check. What is
reasonable will depend on the circumstances of the check.
• You have the right to complain if you believe that we have not treated you fairly.
• You have an obligation to take care to get things right.
• If you have an adviser, you must still take reasonable care to make sure that any
returns, documents or details they send us on your behalf are correct.
Your Charter explains what you can expect from us and what we expect from you.
For more information go to hmrc.gov.uk/charter
These notes are for guidance only and
reflect the position at the time of writing.
They do not affect any right of appeal.
HMRC Digital Service
March 2013 © Crown copyright 2013
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