Managing serious defaulters

Produced by Tolley in association with Guy Smith of inTAX Ltd
Managing serious defaulters

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Guy Smith of inTAX Ltd provides comprehensive and up to date tax information covering:

  • Managing serious defaulters
  • Introduction
  • What is the purpose of the MSD programme?
  • Who is a serious defaulter?
  • Deliberate defaulters
  • Security against future default
  • What happens after selection?
  • Who is monitored?
  • What is monitored?
  • Exemptions
  • More...

Introduction

The managing serious defaulters (MSD) programme is an enhanced monitoring programme for certain individuals and businesses who have been found to have deliberately evaded the tax system and who HMRC therefore consider are ‘high risk’. It looks closely at a defaulter’s tax affairs to ensure that they are complying with all their tax obligations and tackles ongoing risk through early compliance activity. HMRC’s aim is to deter people from defaulting in the future and to reassure honest taxpayers that serious defaulters will be penalised and their tax affairs closely supervised.

Individuals and businesses will be notified by HMRC of their inclusion in the programme, and a copy of the letter will be sent to the authorised agent.

The letter is accompanied by factsheet CC/FS14.

It should be noted that there is no monetary limit that must be breached before someone is included in the scheme. There is also no right of appeal against inclusion in the scheme. However, the defaulter will have exhausted all appeals processes and internal review processes before they are admitted to the scheme.

If a person or business considers that they do not meet the criteria to be included in the scheme, they can make representations to HMRC. If the person or business is still not satisfied with the outcome of a review, they can request an independent review of the matter.

Under current penalty rules, each error uncovered is analysed separately and the behaviour surrounding each error considered. For example, if three errors are identified, one may have been made despite reasonable care, one may have been made carelessly, while one may have been made deliberately.

All it takes is for one error to attract a deliberate penalty and the individual or business is automatically entered into the MSD programme. See the Calculating the penalty for inaccuracies in returns ― behaviour of the taxpayer guidance note for more on behaviours.

More information can be found in CH480100 and the HMRC Factsheet CC/FS14.

What is the

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