Legality of Pursuing Tax Payer if Employer is Prosecuted for Fraud

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Dear HM Revenue and Customs,

HMRC generally take the view that "tax affairs are the responsibility of the tax payer". However, it is possible that an employer could pay the worker the net of their gross income, but fail to make the tax payments to HMRC on their behalf. In such a situation, the employer would be defrauding HMRC, and presumably could be prosecuted as such.

Taking this hypothetical situation, please provide any research or studies HMRC has performed into the legality of pursuing a tax payer for tax unpaid by an intermediary (the fraudulent employer, in this case), who has been successfully prosecuted. Aside from the general nature of such a situation, please also detail what effect monies recovered from the fraudulent employer by HMRC would have on such a case with a tax payer (eg. would it reduce the amount HMRC would attempt to recover from the tax payer).

Yours faithfully,

Ralph Bolton

FOI Team, HM Revenue and Customs

Our ref: FOI2021/15679

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