Voluntary Disclosure

VOLUNTARY DISCLOSURE TO HMRC?

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There are many reasons that making a voluntary disclosure to HMRC may be the right course of action for you. You may well have started out with the best of intentions with regards to notifying HMRC of income which gives rise to a charge to tax, but with the passage of time matters can quickly get out of hand, sometimes it is easier to ignore stark reality and bury your head in the sand. Now is the right time to take control.

HMRC deal with taxpayers who come forward voluntarily and disclose a previously unknown source of taxable income in wholly more lenient fashion than those who are identified by other means. This is known internally as the voluntary disclosure process.

HMRC’s access to and interrogation of information from third party sources has improved vastly over recent years, resulting in the creation of specialist hidden economy tax investigation units whose sole responsibility is to identify those who are operating in the “black economy”.

The most serious cases of tax evasion could be considered suitable for a criminal prosecution, but even if the taxpayer is investigated under civil powers, the penalties levied can be as much as 100% of any tax lost.

WHAT IS A VOLUNTARY DISCLOSURE?

A voluntary disclosure is the act of informing HMRC of non-compliant activity without first being prompted to do so. A prompt being an action; usually a letter, which may have motivated you to come forward. Effectively when making a voluntary disclosure; you are notifying HMRC of historical tax irregularities that may have brought about a loss of tax to the exchequer.

DO HMRC OFFER ENCOURAGEMENT AND INCENTIVES IF I COME FORWARD AND MAKE A VOLUNTARY DISCLOSURE?

Yes, they do. HMRC invest significant resources in targeting tax evasion. Tens of thousands of tax investigations are started each year because HMRC strongly suspect that tax is at risk.

These investigations range in seriousness from local compliance checks or checks of self-assessment tax returns; through to more serious investigations under Code of Practice 9. HMRC also reserve the right to prosecute in the most serious cases of tax fraud or evasion.

However, HMRC cannot investigate everybody. This is why they actively encourage errant taxpayers to come forward and make a voluntary disclosure.

SHOULD I MAKE A VOLUNTARY DISCLOSURE TO HMRC?

The concise answer to this question is always a resounding “yes”. If you have concerns regarding your tax affairs, specifically revolving around unpaid taxes, then the best way to clear this up is via the voluntary disclosure process. Making a voluntary disclosure to HMRC has 3 clear benefits:

  • It removes the risk of being prosecuted for tax evasion
  • HMRC will deal with you more leniently in terms of financial penalties
  • You can begin sleeping again; free of worry, ready to tackle the most important things in your life

SHOULD I JUST RISK NOT GETTING CAUGHT?

More than ever the answer to that question is a categorical “no”. Tax evasion has never been more prevalent in the national thinking. Just look at the media coverage in the last few years. Imagine how that focus is going to increase in the post Covid-19 era.

Tax fraud is now a national taboo. This is reflected in the language of government and in the action being taken by HMRC. The department now invest huge resources in identifying those who are not meeting their tax obligations.

WHAT WILL HAPPEN IF HMRC CATCH UP WITH ME BEFORE I MAKE A VOLUNTARY DISCLOSURE?

The resources invested in identifying tax evasion are matched by HMRC’s action should they catch up with you. If you do not come forward and make a voluntary disclosure you could face:

  • A prolonged tax investigation
  • Huge stress; both financial and personal
  • Severe penalty action; up to 200% of the loss of tax
  • Your assets, including your home, being placed at risk
  • A serious fraud investigation under Code of Practice 9
  • Being named and shamed on the internet and in the local press
  • Criminal prosecution with the strong possibility of a prison sentence

Highly recommended

I contacted Admiral Tax following receipt of an HMRC tax investigation letter. I also had a separate disclosure to make. My case has been just been settled and I am thoroughly delighted with the result. I found Dominic absolutely fantastic to deal with. In fact, I could not have wished for a better representative to handle my case; both on a professional and personal level. Dominic was empathetic, technically brilliant and clear throughout. Moreover, he was always available to take my calls day and night. I can’t recommend Admiral Tax enough.

Susanna Birkett

6) CAN I TRUST THAT HMRC WILL NOT PROSECUTE ME?

Yes; you can be absolutely assured that if you come forward and make a full and properly prepared voluntary disclosure HMRC will settle your case by civil means. This is a part carrot, part stick approach by HMRC compliance. It would be nonsensical and self defeating for the department to offer you an opportunity to bring your tax affairs up to date with an immunity promise; only to renege on it later. HMRC would quickly lose credibility and the whole voluntary disclosure process would be compromised and redundant.

If you are honest and come clean; even if your disclosure is not perfect, then HMRC will always settle for the tax you owe, plus interest and a penalty. It is vital that your disclosure is complete to the best of your knowledge and belief. That is why specialist representation by a voluntary disclosure specialist is absolutely essential. The voluntary disclosure process is not something to short change. That will almost certainly lead to problems; which defeats the point of the exercise.

7) IS THE VOLUNTARY DISCLOSURE PROCESS JUST FOR LARGER CASES OF TAX EVASION?

Absolutely not. If you have underpaid taxes for any reason then you should always come forward. Remember that HMRC may not have any real indication of the level of your evasion before beginning their own tax investigation. Should HMRC begin their own enquiries you could face a prolonged check of self assessment tax return or HMRC compliance check. These type of enquiries can quickly spiral and aggravate if not managed effectively. You earn a considerable amount of goodwill from HMRC by coming forward and making a voluntary disclosure in advance of any compliance intervention by them.

8) WHAT PENALTIES WILL I FACE BY MAKING A VOLUNTARY DISCLOSURE?

There are several possibilities; determined by factors such as behaviour, quality of disclosure, cooperation and giving and telling. However, if your voluntary disclosure is complete, robust and prepared professionally by specialist you will likely mitigate many if not all of these influences. One thing is certain; you will receive more favourable penalty action by choosing to make a voluntary disclosure, than by waiting and risking HMRC catching up with you.

You can read more about HMRC penalties by clicking on the link below:

9) ARE THERE ANY CIRCUMSTANCES WHERE HMRC WILL NOT CHARGE A PENALTY?

Yes there are. If your chosen voluntary disclosure specialist can successfully demonstrate that you have acted carelessly; as opposed to deliberately, then HMRC may well agree to suspend any penalty action against you. There are however various conditions attached to any suspension. These are known internally as the SAFE conditions. Your adviser will be explain this in more detail.

10) WHAT HAPPENS AFTER MY VOLUNTARY DISCLOSURE IS FILED WITH HMRC?

HMRC will begin by acknowledging your disclosure; before checking this against their information and intelligence databases. They will likely test some aspects of your voluntary disclosure by asking your adviser to supply additional information or documents. We cannot emphasise enough the importance of a well prepared voluntary disclosure report. Achieve that and you will be free of worry very quickly.

Admiral Tax will handle the entire voluntary disclosure process for you. You will not need to speak or meet with HMRC at any stage. You are however copied in on all correspondence relative to your case.; meaning that you will never be left in the dark or feeling uncertain.

Our record in filing successful voluntary disclosures in unrivalled. This is not just hyperbole either. Please take some time to read our independently validated reviews on Trust Pilot and Google.

11) HOW LONG WILL THE VOLUNTARY DISCLOSURE PROCESS TAKE?

This is probably our most commonly asked question. It is virtually impossible to be precise; because your voluntary disclosure will largely be determined by its scale and gravity. In other words the number of years involved and the complexity of the irregularities being disclosed. Over 90% of the voluntary disclosures we handle are settled within 6 months. A time frame well below the accepted industry standard.

12) SHOULD I CONSIDER ANOTHER VOLUNTARY DISCLOSURE OPTION?

If your voluntary disclosure is larger in scale and involves deliberate conduct over a number of years; then you may be better served by using HMRC’s Contractual Disclosure Facility under the COP 9 provisions. You should never take a decision on where to route your voluntary disclosure without seeking specialist advice. You can read more detailed information on Code of Practice 9 (COP 9) and HMRC’s Contractual Disclosure Facility by visiting our dedicated pages listed under further reading below.

13) WHY SHOULD ADMIRAL TAX HANDLE MY VOLUNTARY DISCLOSURE FOR ME?

Admiral Tax Investigations have unrivalled experience in handling cases under the voluntary disclosure to HMRC  process with a proven track record in negotiating vastly reduced settlements. We will seek a tax-efficient resolution to your case, ensuring that you achieve the minimum settlement in the minimum time. Admiral Tax typically settle cases involving a voluntary disclosure within 6 months.

14) WHAT SHOULD I DO NEXT?

In short, do not panic, specialist help is at hand. If you wish to make a voluntary disclosure to HMRC then please contact Admiral Tax for help. Admiral Tax Investigations have decades of voluntary disclosure experience, ensuring that you receive the very best representation possible.

Further reading