Those identified as serious defaulters and placed into the programme will be closely monitored by HMRC on all aspects of their tax affairs until HMRC is satisfied that they no longer pose a high risk.

For most defaulters, monitoring will last for between two and five years. 

If HMRC decides to put a serious defaulter into the programme, they will write to that individual or business to inform them.

According to the factsheet ‘serious defaulters’ are those who have been charged a penalty because of their deliberate behaviour;  identified, during a Civil Investigation of Fraud, as presenting a continuing high risk to HMRC; successfully prosecuted by a prosecuting authority for a tax matter, or have been charged a Civil Evasion penalty for dishonesty. They are required to give security to HMRC as a guarantee against potential future default; or if successfully pursued, by an Insolvency Practitioner, for a claim on behalf of HMRC for recovery of money or assets.

HMRC says how they monitor a defaulter will depend on what they did and the risk of recidivism.

In addition to monitoring the defaulter to make sure they meet their tax obligations and, in the case of individuals, the obligations of any businesses they control, HMRC may require the defaulter to meet additional obligations, such as providing a detailed balance sheet to accompany future tax returns. The taxman will also scrutinise the tax returns of those on the programme more closely.

The monitoring could take the form of announced or unannounced inspection visits, and rigorous compliance checks into all or any part of the defaulter’s tax affairs.

The factsheet highlights that defaulters may face additional penalties or criminal proceedings against them if they are found to have continued to deliberately or dishonestly get things wrong, or get out of paying what they owe.

The factsheet is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372579/CC-FS14_11_14.pdf