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HMRC internal manual

Compliance Handbook

The managing serious defaulters (MSD) programme: monitoring all entities associated with a person entering MSD

A person who is deliberately non-compliant has shown themselves to be a high risk to HMRC. We believe that this behaviour may be present in their other dealings with HMRC and therefore we may monitor any entity in which a deliberate defaulter has control or a controlling interest.

This concept of the risk following the person may apply to:

  • any entity in which the deliberate defaulter has control or a controlling interest (for example, where the defaulter is an individual we may also monitor a company which he controls)
  • any entity or person who has control or a controlling interest in a deliberate defaulter (for example, where the defaulter is a company we may also monitor the director who controls it).

When a person enters the Managing Serious Defaulter (MSD) programme we may monitor all relevant tax and duties, irrespective of the duty or tax type that prompted the initial referral to MSD, and consider all entities for which the person has influence or control or a controlling interest.

Note: It is the Serious Defaulters Management Unit (SDMU) who will consider the other entities for which a person has influence or control over.

Cross tax cases

The MSD process will not affect your normal cross tax working process and how you go about that part of your business.

Compliance checks that involve more than one tax or duty (for example CT, VAT and EC) may be worked by different officers, each responsible for their own tax or duty.

There will be cases where a deliberate penalty arises in only one tax or duty, but not all. It is vital in these circumstances that the tax head lead officer refers the case to the SDMU using the Penalty Decisions and Actions Checklist (PDAC) or manual form, to consider monitoring as soon as the deliberate penalty is finalised and the appeal period passed.