V5.341 Dishonest conduct

Position prior to 1 April 2008

Introduction

The provisions described below were, for the most part, repealed with effect from 1 April 20081. However, they are retained for dishonesty to which the penalty regime effective from 1 April 2008 does not apply2, ie dishonesty which does not relate to an inaccuracy in a document (for example the dishonest failure to notify HMRC of a liability to register for VAT) or to a failure to notify HMRC of an under-assessment by them. The provisions are therefore described below.

A person3 is liable to a penalty if he does any act, or omits to take any action, for the purpose of evading tax and his conduct involves dishonesty4. For HMRC's policy on penalties for dishonest evasion, see Notice 160 (December 2011) and CC/FS20.

The fact that dishonesty is not alleged in relation to direct tax matters covering the same transgression does not preclude HMRC from bringing proceedings under this provision5.

“Evading tax” includes obtaining any of the following sums to which the person is not entitled6

  1.  

    (1)     payment of VAT credits7;

  2.  

    (2)     refund of tax under the do-it-yourself builders scheme8;

  3.  

    (3)     refund of tax under the bad debt relief provisions9;

  4.  

    (4)     refund of tax in relation to new means of transport supplied to other member states10;

  5.  

    (5)     repayment of tax to EU and third country traders11; or

  6.  

    (6)     claims for refunds in respect of goods acquired from other member states12.

Conduct involves “dishonesty” whether or not it is such as to give rise to

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