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The consultation considered the case for introducing escalated penalties for repeated non-compliance. Most respondents agreed with the principle of levying escalated penalties for repeated non-compliance. Many stakeholders believed that any new penalty model should be simple, clear and fairly applied. Many respondents also signalled that the design of any new penalties regime should be based on a good understanding of why some taxpayers are non-compliant.
The consultation also made a case for strengthened monitoring for those found to be operating in the hidden economy. Many respondents welcomed the proposal to strengthen monitoring for hidden economy activity, and would like to see this accompanied by increased HMRC engagement, communications and general tax education.
The government will consider the design of a stronger ‘failure to notify’ hidden economy penalty which will be delivered as part of the longer term HMRC Penalties Review. HMRC will strengthen its monitoring of taxpayers previously found to be operating in the hidden economy, to keep them compliant.
This consultation explores the potential for new penalties and sanctions to tackle those operating in the hidden economy, including those who have already been penalised for non-compliance, but have not changed their behaviour.
This consultation propose some options for new sanctions, and seeks views on how those might be designed fairly and effectively to deter hidden economy activity.