The fourth annual survey by the tax investigations team of Crowe Clark Whitehill, called ‘Is there light at the end of the tunnel?’, found there was a rise in voluntary disclosures which indicated that some aspects of HM Revenue & Customs’s tax disclosure initiatives were working.
But there were still many areas for improvement, mainly in the area of improving understanding of the disclosure facilities on offer for UK taxpayers.
A significant 20% of accountants were also completely unaware of the Isle of Man and Channel Island disclosure facilities and only 23% claimed to have full awareness of these facilities and the beneficial terms they offer for a taxpayer with a disclosure to make.
HMRC’s working practices were highlighted as having a perceived focus on low level, non-fraudulent cases, with only 16% of respondents having experienced a tax fraud investigation under the Contractual Disclosure Facility, HMRC’s normal process for investigating fraud.
John Cassidy, tax investigations partner at Crowe Clark Whitehill, said: “The rise in voluntary disclosures since disclosure facilities were introduced in 2007 indicates that they are an effective means of encouraging people to come clean about their tax affairs – but a lack of understanding amongst advisers may be holding back uptake.”
He added that “83% of our respondents agreed that fear of prosecution really motivates disclosure of tax irregularities. However, it seems that HMRC rarely opens such investigations, focusing attention and valuable resources on low level, negligent and accidental tax cases. Given the huge sums of money involved in deliberate fraud cases and aggressive tax evasion strategies, this suggests that HMRC is focusing its attention on the wrong area.”
To read about why HMRC has been criticised for sending another letter to UK holders of Swiss bank accounts warning that they must settle their liabilities, click here.
