The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of what happens if HMRC suspects ‘conduct involving dishonesty’ has taken place whilst they are undertaking a indirect tax compliance visit. The following procedure covers all indirect taxes with the exception of Stamp Duties, Customs Duties and import VAT.
This procedure is designed to be used for cases involving a lower value where there is evidence of dishonest conduct or deliberate behaviour and HMRC do not consider that the COP9 procedure is the most suitable way of dealing with the matter. Please see the Fraud civil investigation - COP9 offer made from 30 June 2014 - overview guidance note for more information on the COP9 procedure that applies from 30 June 2014.
If HMRC identifies that the business has not accounted for indirect taxes correctly due to conduct involving dishonesty during a compliance check then they may levy a civil evasion penalty under VATA 1994, s 60 on the business. If HMRC also establishes that the business has not accounted for indirect taxes correctly due to deliberate behaviour then they can also apply a deliberate or a deliberate and concealed penalty as well. Please see the Deliberate understatement guidance note for more information on these terms.
If HMRC has reason to believe that the taxpayer has behaved in a dishonest manner then they will invite the taxpayer and their professional adviser (if they have one) to attend a meeting to discuss HMRC’s concerns. The taxpayer will be asked to confirm whether they have any special needs or require an interpreter at the meeting so they can ensure that they prepare for the meeting taking all of these things into account.
HMRC will advise the taxpayer and their professional adviser:
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