The advantages of making a voluntary disclosure to HMRC

If you have undisclosed tax liabilities, you need to consider the advantages of making a voluntary disclosure to HMRC rather than waiting and risking the possibility of a HMRC initiated tax investigation.

Voluntary full disclosures are undoubtedly the best way of protecting yourself from the most serious level of investigation activity, namely a criminal tax investigation, which includes the possibility of prosecution. Furthermore, approaching HMRC will significantly reduce the financial penalties that will be charged and if your disclosure is accepted as full and unprompted, HMRC will be prevented from publishing your details on its “tax defaulters” website thereby maintaining your privacy.

No business or individual should consider itself beyond enquiry. HMRC has amassed a huge amount of information through a number of avenues including its own intelligence, third party records, information notices for bank accounts held both in the UK and overseas, and information exchange agreements with foreign jurisdictions. In one of the few successful UK Government information technology projects, HMRC now has the CONNECT computer system to interrogate this information and compare details to tax returns made by individuals and businesses.

Whilst HMRC operate a series of targeted campaigns and disclosure facilities aimed at specific groups of taxpayers, there can be no guarantee that these will fit your circumstances or that HMRC will not initiate an investigation into your financial affairs while you wait to see if a suitable campaign or facility is offered. If there are errors in your tax affairs, then disclosing them voluntarily is usually the best way of protecting yourself from the worst effects of a tax investigation.

Furthermore, HMRC have said that those who come forward voluntarily to put their tax affairs in order can expect to be treated very similarly to those taking advantage of targeted campaigns and disclosure facilities.

  • UK tax advice for private clients

    Simply contact us, or call 020 3195 1300 for more information on our specialist UK tax advice for private clients, entrepreneurs and high net worth business owners.