New tax investigation regime

Posted: 31st January 2012

The Contractual Disclosure Facility (CDF) is a system by which HM Revenue and Customs (HMRC) will contact a taxpayer in writing to inform them that they are suspected of serious tax fraud and will offer them the ability to disclose the fraud formally within 60 days. If the fraud is disclosed, HMRC will agree contractually not to undertake criminal proceedings.
The investigation will then continue under civil law, with a settlement for tax, interest and penalties the result.
If a fraud is not disclosed and a criminal investigation does result, HMRC will have to build a criminal case. However, if successful the results are likely to be far worse, as imprisonment and the use of powers under the Proceeds of Crime Act 2002 to confiscate ‘criminal assets’ will be the likely result.