The Managing Deliberate Defaulters (MDD) programme has been established to monitor the affairs of those who have deliberately evaded tax for a period of between two to five years. It is the latest initiative to come from HM Revenue and Customs (HMRC) in its drive to halt the UK’s escalating tax arrears position, according to Steve Clancy, partner at tax arrears specialists, MCR.
The government announced the scheme in February.
Clancy said: “MDD will closely monitor the tax affairs of individuals and businesses who have deliberately evaded tax to ensure that they are complying with their tax obligations and have demonstrated a permanent change in their behaviour. This initiative, announced a few months ago and only now being implemented, is the latest in a string of initiatives being rolled out by HMRC as it evolves its strategy to tackle what some people believe to be a mountain of £50bn in overdue tax.
“Under the provisions of the MDD there is no right of appeal and a number of intrusive measures are being considered to enforce compliance. Nine hundred MDDs have already been targeted by HMRC, so beware,” he added.
There are a variety of ways HMRC can monitor a deliberate defaulter’s tax affairs. These include:
- Making announced or unannounced inspection visits to carry out pre-return checks of company books and records.
- Asking for certain records so that they can be checked.
- Requiring that additional information or documents are sent in with the person’s tax returns.
- Conducting in-depth compliance checks into all or any part of the person’s tax affairs.
- Observing and recording the person’s business activities and cross-checking details in their accounts.
- For VAT customers HMRC may require submission of quarterly or monthly VAT returns, as well as require the same accounting periods for VAT and income tax or corporation tax.
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