CIOT: Chartered Institute of Taxation: Institute welcomes tax fraud consultation

Under the proposed Contractual Disclosure Facility, HM Revenue and Customs (HMRC) would offer some people suspected of tax fraud the opportunity to enter into a contract to disclose that fraud in exchange for a guarantee that they will not face criminal prosecution. This would apply only to cases where HMRC believe that criminal investigation is not in the public interest nor the most cost effective way to tackle the suspected fraud and have decided to use their Civil Investigation of Fraud Procedure.

Gary Ashford, who represents the CIOT on the Compliance Reform Forum, commented:

“HMRC’s proposals would potentially help and provide greater clarity to those who want to engage with the taxman. It would tighten the net on those who have deliberately evaded their taxes and who think they can carry on evading or seek to drag out HMRC enquiries without any intention of paying.

“Anyone entering into such a contract needs to be fully aware that where they fail to comply with the contract, for example by procrastinating or not making a full disclosure, they will potentially face cancellation of the agreement and, in the worst cases, criminal action.

“This is yet another announcement in relation to countering tax evasion so no one should doubt the direction of travel of the Government’s drive to close the tax gap.

“Anyone who is worried that they have been underpaying tax – whether deliberately or in error – should get professional tax advice without delay. There are a number of existing disclosure opportunities they may be able to take advantage of. Even if they are not covered by these, penalties will generally be less severe for taxpayers who come forward voluntarily to put their affairs in order with HMRC.

“With HMRC targeting a five-fold increase in criminal prosecutions for evasion, the consequences of not clearing up tax irregularities could be grave.”

Notes for editors

The Chartered Institute of Taxation has long argued that more effort needs to be put into investigating and tackling people who seek to evade tax. Our members (Chartered Tax Advisers) help taxpayers comply with their responsibilities under the tax system and manage their way through its complexities. As well as breaking the law, those who evade tax gain an unfair business advantage enabling them to undercut and even drive out of business those who pay their taxes in full.

The HMRC consultation paper, Civil Investigation of Fraud – Contractual Disclosure Facility, is available on the HMRC website at The consultation runs until 20 September 2011.

The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.

The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT’s 15,400 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.

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