Over the last decade there have been many favourable amnesties available to facilitate the disclosure of any historical income and gains linked to offshore assets and investments, as well as domestic matters.  HMRC are therefore taking a much stronger stance against any taxpayers who, in their eyes, have previously opted not to disclose voluntarily despite several prompts and opportunities publicised in the media and by tax professionals.

With the introduction of the Common Reporting Standard and various Beneficial Ownership Registers, HMRC’s ability to access third party information in other jurisdictions has increased significantly. These new data sources are enabling HMRC to more easily identify individuals who have not ensured that their tax affairs are up to date.

Furthermore, the “Failure To Correct” provisions come in as of 1 October 2018, so it is more important than ever to ensure that your tax affairs are in order.

Failure to do so could result in penalties of up to 300% of the potential lost revenue (new minimum of 100%), a new 10% asset-based penalty and more likely “naming and shaming”, whereby your name, address and details of tax underpaid are published by HMRC. This list is searched for and accessed by anyone online, giving significant scope for reputational damage, which we understand clients wish to avoid.

HMRC have also made it clear that they will not hesitate to prosecute individuals where appropriate, especially with them needing to meet targets.

Making a voluntary disclosure will mitigate many of these sanctions. So taking control of the process will make all the difference when it comes to negotiating penalties, and demonstrating to HMRC that you are keen to ensure that your tax affairs are in order.

There are currently several options for making a voluntary disclosure to HMRC. The best first step is to get in touch with specialists who will advise on the most appropriate disclosure route for you. For example, if you have undeclared rents then you may wish to register under the Let Property Campaign (LPC), or for overseas income, there are several options.

HMRC do reserve the right to refuse entry into any formal tax disclosure process. In which case they may open a compliance check or, in more serious cases, a fraud investigation.

Despite the voluntary nature of making a tax disclosure, it is also important to remember that any potentially contentious interaction with HMRC is taken seriously. Failure to provide a full and complete disclosure of all relevant liabilities may have significant implications.

We would, therefore, advise that any client considering making a tax disclosure speaks to our professionals before initiating contact with HMRC, to ensure that the application for registration process runs as smoothly as possible and that the disclosure route chosen is the best option for them, having in mind their wider affairs and the risk of penalties and prosecution.

If you have already been approached by HMRC and you wish to discuss what to do next, please visit our tax investigations page or give us a call and one of our specialists will explore how best to protect your interests, ensure that HMRC are not obtaining information they are not entitled to, and ensure that the correct amount of tax is paid.