Welsh Revenue Authority: approach to dealing with tax avoidance and evasion

This explains:

• the importance of engaging with us as soon as possible
• how to contact us
• what’s likely to happen if you do not tell us about it

We manage 2 devolved taxes designed and made for Wales to help fund Welsh public services:

• Land Transaction Tax
• Landfill Disposals Tax

We’re proud of our role in raising vital funds to support services, like the NHS and schools, in communities across Wales. We use ‘Our Approach’ - a Welsh way of doing tax that is efficient and effective, working with:

• solicitors and conveyancers
• taxpayers
• partner organisations

We have a zero-tolerance policy towards tax avoidance and evasion.

This means we actively:

• seek out and address these behaviours
• recover unpaid tax
• charge interest and penalties where appropriate

In cases of tax evasion, we may pursue a criminal prosecution.

We use the data we hold, and data and intelligence from third parties to uncover and address tax avoidance and evasion.

If you think you may have used a tax avoidance scheme, or knowingly or unknowingly paid less tax than you should’ve, please tell us as soon as possible.

We will:

• check your tax position
• advise you on what to do next
• help you put it right

You will have to pay interest on any unpaid tax, and you may also have to pay a penalty.

If you’ve been approached by somebody offering to reduce your tax liability, or amend your return to save tax, please contact us. If it seems too good to be true, it probably is.

Report tax avoidance and evasion.

If you have something wrong on your own tax return as a result of an avoidance or evasion scheme, please call us on 03000 254 000.

If you call us, we’ll take limited details and arrange for a specialist to call you back.

Our penalty regime aims to encourage compliance with the devolved taxes. And to discourage anyone from bending or breaking the rules.

Penalties are charged on careless and deliberate behaviour by taxpayers which lead to an underpayment of tax. This means they apply to tax avoidance and tax evasion cases. 

The penalty regime is designed to recognise people who come forward to tell us about any underpayment of tax and work with us to resolve it. If we charge you a penalty, we’ll give you further information, including your appeal rights, at the same time.

Penalties are based on the potential lost revenue. That means the difference between what you’ve paid and what you should’ve paid.

If you tell us about the inaccuracy first

Any penalty will be lower if you tell us that you’ve paid less tax than you should’ve first. This is called an ‘unprompted disclosure’.

In most cases it’s likely that you or your agent approaching us to disclose details of an inaccuracy in a return, or failure to make a return, will be viewed as an unprompted disclosure.

We have the discretion to reduce a penalty when you tell us about:

• a careless inaccuracy made in a return: to between 0% and 30% of the lost revenue instead of a minimum of 15%
• a deliberate inaccuracy in a return: to a minimum of 30% of the potential lost revenue instead of a minimum of 50%

If you do not tell us about the inaccuracy before we find out

It will be considered a ‘prompted disclosure’ either:

• through our own investigation or where we ask you questions; or
• where you disclose it to us because you think we’re about to discover the inaccuracy ourselves

For a deliberate inaccuracy where we prompt the disclosure, the minimum penalty is 50% of the potential lost revenue and can be a maximum of 100%.

We decide by how much we can reduce a penalty within the ranges below. Based on the level of your cooperation with us in correcting the inaccuracy.

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Telling, helping, giving access

We always start at the maximum penalty in each range and use 3 criteria:

• telling
• helping
• giving access

This helps us decide by how much we can reduce the penalty, based on the level of your cooperation. Here are some examples…

Telling us:

• about or agreeing that there’s something wrong, and how and why it happened
• about the extent of what’s wrong as soon as you know about it
• by answering questions in full

Helping us:

• to understand documents or information
• by checking records to identify the extent of the inaccuracy

Giving us access:

• to documents we’ve asked for as soon as possible
• to documents we may not know about, as well as those we ask to see

Once you’ve told us about the inaccuracy in your return, the more you tell us, help us, and give us, the greater the reduction in any penalty is likely to be.