Managing Serious Defaulters (MSD)

By Tolley
VAT_tax_img2

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Managing Serious Defaulters (MSD)
  • MSD programme
  • Definition of a serious defaulter
  • Serious Defaulters Management Unit (SDMU)
  • Individuals who are monitored
  • What is monitored under the programme
  • Failure to meet obligations imposed under the MSD
  • Monitoring period
  • Impact
  • Appeals and reconsiderations
  • Providing financial security

HMRC has announced the introduction of a programme called Managing Serious Defaulters (MSD) that came into effect from 1 April 2013 and replaces the Managing Deliberate Defaulters (MDD) scheme that applied to direct tax. The revised programme has been extended to cover VAT. A brief overview of the programme has been provided below. More information can be found in CH480100 and the HMRC Factsheet CC/FS14 .

MSD programme

This is an enhanced monitoring programme that will be operated by HMRC in respect of taxpayers they consider as 'serious defaulters'. HMRC will closely examine the defaulter's tax affairs to ensure that they comply with all of their tax obligations. It is also intended to tackle ongoing risks by undertaking regular compliance checks. The scheme is intended to ensure that taxpayers will be deterred from defaulting in future and to give reassurance to law abiding taxpayers that defaulters will be closely monitored and penalised where appropriate.

CH480100

It should be noted that there is no monetary limit that must be breached before a business or person can be included in the scheme.

Definition of a serious defaulter

This information has been extracted from HMRC’s online guidance:

“For the purpose of the Managing Serious Defaulters programme, a serious defaulter is a person who has been:

  • charged with a penalty for a deliberate offence under specific taxes legislation or otherwise identified, during a Civil Investigation of Fraud, as presenting a continuing risk to HMRC
  • successfully prosecuted by the Director of Revenue & Customs Prosecutions or another prosecuting authority for a tax matter
  • charged with a civil evasion penalty for dishonesty
  • required to pay security for VAT, Environmental Taxes, PAYE or National Insurance contributions, or

    More on Investigations: