Penalties: Civil evasion penalties
If a registrable person, for the purposes of evading tax, does any act or omits to take any action, and the conduct involves dishonesty (i.e. fraud), that person makes himself liable, under paragraph 1 of the Finance Act 2007, Schedule 24 as amended, to a penalty.
This parallels the existing penalty for civil evasion in VAT and is in line with the excise penalty regime. As is common practice in other tax areas, the law allows us the discretion to deal under a civil penalty regime with an offence which would otherwise require prosecution as a criminal offence. This not only provides an incentive for the taxpayer to co-operate with us once the fraud has been discovered, but prevents needless expense in taking cases involving small amounts of tax to the criminal court.
The guidance in Code of Practice 9 (2005) (HMRC website) which covers cases where we suspect serious fraud and we give the person the opportunity to disclose fully all irregularities in their tax affairs, should be followed as appropriate.
Admission of induced evidence
Sub-paragraphs (1) to (4) of paragraph 13 of the Finance Act 2001, Schedule 7 allow the admission of induced evidence, that is, the person was or may have been persuaded in certain circumstances to make statements or produce documents. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)