Voluntary HMRC disclosure
Tax • Tax Disputes and Investigations
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If you are aware of any irregularities in your tax affairs, the single most effective means of reducing the financial penalty that you will pay to HMRC is by making a voluntary HMRC disclosure.
Get help with your disclosure today: +44 (0)20 7710 3389
Will HMRC find the irregularities?
HMRC gains access to more and more data every year. It currently receives information from 28 data sources including Companies House, Land Registry, the Benefits Agency, Experian, eBay an even UK banks. Since 2017, HMRC has also had access to information from overseas thanks to the Common Reporting Standard (CRS). This is an information-sharing agreement between countries all over the world, meaning HMRC has access to information about overseas accounts and investments, including those held by UK resident taxpayers through overseas structures.
The power of ‘Connect’
All information collected under the CRS is analysed by HMRC’s Risk Intelligence Service (RIS). They are a team of specially trained data handlers who use a custom made interrogation system called ‘Connect’ to identify possible errors or omissions in a taxpayer’s affairs. The number of HMRC investigations generated by leads from ‘Connect’ increases each year, and it is now believed to account for at least 90% of HMRC’s cases.
What will HMRC do if they find an irregularity?
If HMRC can successfully challenge the accuracy of your tax affairs, the law allows them to charge penalties of up to 100% of the tax that has been lost if the matter involves UK activities, rising to 300% for offshore. In either case, this is significantly more than what would be charged if you make a voluntary disclosure, and it may even be possible to avoid a penalty entirely. In the most serious cases, HMRC may elect to conduct a criminal investigation with a view to criminal prosecution.
How can you protect yourself?
If you have undisclosed income or gains either in the UK or overseas, a voluntary disclosure to HMRC is the best way of protecting yourself from punitive action.
HMRC is aware that many taxpayers do wish to correct previous errors. To accommodate this, they have created a range of disclosure facilities. These include:
Profit Diversion Compliance Facility
Card Transaction Programme
It is vitally important to use the correct disclosure facility to make HMRC aware of the errors in your tax affairs. Using the right disclosure facility can ensure that you:
Effectively manage and control the scope of HMRC’s investigation
Minimise the risk of further questioning from HMRC
Limit the period to which HMRC can ask questions
Avoid criminal prosecution
Only pay the minimum penalty enforceable by the law (in some cases this is 0%).
How we can help
We have extensive experience in assisting clients who wish to make a voluntary and unprompted disclosure of errors in their tax affairs. We will review your position and determine whether you have received funds that should have been declared. If we conclude that you should make a disclosure, we will advise you of the best option for your circumstances and will work with you to make that disclosure in the most cost-efficient way. We will also take steps, from the outset, to reduce the extent of any potential enquiry, and mitigate any financial and non-financial penalties that could be applied. To date, our involvement in such cases has prevented clients from being named and shamed as tax evaders, or, worse still, criminally prosecuted.
We can guide you through the disclosure process and act as your representative and agent, ensuring you have minimum contact with HMRC and safeguarding your best interests.