In its Civil Investigation of Fraud (CIF) – Contractual Disclosure Facility (CDF) consultation document, HMRC said that it has been looking at the options for toughening and tightening the current CIF process.
It said that, after considering a number of other options, it had decided not to change its current policy of considering any suspected tax fraud for criminal investigation before any civil procedure is considered.
However, HMRC has proposed writing to the individual informing them that they are suspected of tax fraud and offering them the opportunity to enter into a contract to disclose that fraud in exchange for “certainty that it would not carry out a criminal investigation.” The individual would then be required to make an outline disclosure of all known irregularities within a short time – HMRC has suggested this period should be 60 days but is looking for industry feedback on this specific point.
The disclosure would have to cover:
- a general description of what had happened
- entities affected and other parties involved
- time span
- an indication of the amounts involved
- an admission of fraud
If possible, and if the individual made a detailed disclosure, HMRC said it would aim to verify the disclosure within a short period of time and conclude matters quickly.
However, if the individual decides not to accept the contract, or took up the contract but then failed to disclose or made a false or partial disclosure, HMRC said it would reserve the option to proceed with a criminal investigation or take other civil enforcement action.
In addition, HMRC has proposed introducing a new feature, under which individuals can make a spontaneous offer to HMRC to enter into a contract of disclosure. The process would work in the same way as the CDF, except that the offer would come from the individual. HMRC said it would normally accept such offers unless, for example, information was held which indicated that the disclosure was likely to be materially incomplete or if a criminal investigation was already underway.
HMRC said it felt the proposals would offer individuals certainty that, should they decided to work with HMRC to resolve matters, they would not be prosecuted and that the removal of this fear of prosecution would encourage more people to do so.
