Voluntary disclosure to HMRC: Is the New Year a time for a fresh start?

Although we live in times of great uncertainty, we can be certain that HMRC will continue to explore new methods of catching up with individuals who have outstanding tax liabilities, says the firm’s Tax Manager Tom Annat.

HMRC’s ‘super computer’ combined with cross border information-sharing agreements has meant that HMRC knows far more about our financial affairs than ever before. Therefore, perhaps the dawning of a new decade is the time to bring your tax affairs up to date?

A voluntary disclosure can be made to HMRC using their Digital Disclosure Service. Through this process HMRC are informed of the amount of additional tax, penalties and interest payable. HMRC will then check the disclosure before reaching a formal agreement.

Penalties will be due if the error or omission was a result of careless or deliberate behaviour. For UK tax issues, the penalties can be up to 100% of the tax due. For offshore activities, the penalties can be up to as much as 300% of the tax due. The minimum penalty for offshore activities is 150% which is reduced to 100% for a voluntary disclosure.

If there is an issue, it is much wiser to bring it to HMRC’s attention first rather than wait for them to come calling. The tax geared penalties will be lower and HMRC are likely to take a more lenient line of enquiry than they would for a case it opened itself. Making a voluntary disclosure will also give you peace of mind.

If you are thinking of making a disclosure or have a tax issue you are concerned about, then we would recommend taking professional advice. We have a team of experienced tax advisors who can help guide you through the process. Please get in touch and we would be happy to help.