Given that HMRC had not discovered this during their visit, Mr X met with his accountant, admitted the irregularities and expressed his desire to disclose his actions to HMRC. Mr X’s accountant told him to sit tight and he would find a specialist advisor to assist in making the disclosure. Unfortunately, such was Mr X’s will to disclose, Mr X decided not to wait.
He instead advised the HMRC lead officer who visited his business premises unannounced that he wished to disclose unrecorded sales. While his intentions were acknowledged, he was not advised that HMRC would take the nature of the irregularities at face value, and his behaviour would be considered deliberate. Mr X was also not advised that he could make a disclosure using HMRC’s Code of Practice 9 facility thus ensuring he would be immune from prosecutions in relation to the irregularities disclosed. Instead, some five days later, Mr X disclosed what he had done and the estimated lost revenue.
Mr X did so expecting to receive harsh penalties in addition to the tax/National Insurance Contributions and interest he would have to pay. What he did not expect was the potential loss of his liberty, business, and personal relationship, as a result of a three-year long investigation.