What is tax evasion?
Tax evasion is illegal in the UK and a taxpayer can be prosecuted as a result. However, the vast majority of tax evaders face a civil Settlement rather than face a criminal prosecution. Tax evasion is where a UK taxpayer deliberately sets out to underpay tax and cannot be committed inadvertently or by mistake.
HMRC can go back 20 tax years (excluding and in addition to the current tax year).
How does HMRC investigate tax evasion?
If HMRC suspect a taxpayer or group or taxpayers of committing tax evasion then HMRC will first and foremost have to consider the evidence they already have in line with their Criminal Investigations Policy.
If the decision is not to prosecute, HMRC will write to the taxpayer(s) concerned and issue Code of Practice 9 (COP 9). HMRC will offer the taxpayers the Contractual Disclosure Facility (CDF) and pursue a civil Settlement.
A civil Settlement will seek to identify all the tax, interest and financial penalties due on all the past tax irregularities.
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