Tax Disclosures
Our practical and robust approach to making tax disclosures will help you resolve matters and deliver the best possible outcome.
In an ideal world, everybody’s tax affairs would always be correct and up-to-date.
Tax can be complicated and anyone can make a mistake, whether you are an individual, self-employed, a partnership, a company, a trustee or an executor of an estate.
When errors or omissions in your tax affairs are identified, the key point is to correct the position and report any unpaid tax liabilities to HMRC as soon as possible.
With any disclosure, there are a number of complex issues to consider and so our expert team can help you navigate factors such as the number of years that need to be disclosed, whether penalties apply and the disclosure route that needs to be taken.
Our team provides a comprehensive service to resolve contentious tax matters with HMRC.
When an error has been identified, we always recommend making an unprompted, voluntary disclosure to HMRC. Approaching HMRC before they contact you will result in:
- lower financial penalties
- reduced professional costs
- a defence against potentially being ‘named and shamed’ by HMRC
- stronger defence against potential criminal prosecution (in serious cases).
If HMRC contact you before you make a voluntary disclosure, it will be classed as ‘prompted’. While this does automatically expose you to a risk of higher financial penalties, it is important to seek the correct professional advice to:
- ensure a high-quality disclosure, to help reduce financial penalties as far as possible
- enable negotiations with HMRC to achieve the best possible outcome
- protect you from an HMRC data fishing exercise
- ensure the best defence against criminal prosecution (if necessary).
HMRC receives a significant amount of data each year, which it uses as a basis for checking taxpayers’ affairs.Examples of sources of information include:
- automatic exchange of financial information between countries under the Common Reporting Standard (CRS)
- HMRC’s ‘Connect’ computer system, which collects and analyses billions of lines of data, from a range of information sources and databases.
As well as using this information as a basis for conducting formal tax enquiries, HMRC uses it to inform its ‘one to many’ approach. This involves sending ‘nudge’ letters to a selected group of taxpayers, prompting them to review their affairs in respect of a particular issue.
Nudge letters are issued where HMRC suspects that tax may have been underpaid. While this may not be the case, a nudge letter should not be ignored. Our team can help you review your affairs and advise on the appropriate response to HMRC.
Once an issue has been identified that requires disclosure to HMRC, it needs to be decided how the disclosure should be made. HMRC provides a number of potential routes to make a disclosure depending on the circumstances, including:
- Contractual Disclosure Facility (CDF) – where there has been a deliberate understatement of tax
- Worldwide Disclosure Facility (WDF) – where the disclosure includes offshore income or gains
- Let Property Campaign (LPC) – where the disclosure includes income from residential property
- Cryptoasset disclosures - where the disclosure relates to income and gains from cryptoassets
- Digital Disclosure Service (DDS) – HMRC’s online route for making disclosures
- Other bespoke disclosures – not all disclosures fit within the above and so a more bespoke approach to HMRC may be more appropriate.
Our team will discuss the options with you and recommend the disclosure route that is most appropriate to your particular circumstances.
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Our award-winning and experienced Tax Resolutions team can help you navigate the process and ensure you meet your obligations.