Untaxed Income or Gains?
What if you realise that there is an element of income that you have not told HMRC about in the past? Maybe some rental income, or investments making a profit, or sale of a property that you did not live in for a gain. What if you have been working for a while but did not get around to registering for self-assessment.
Or perhaps your financial affairs are complex and something has been missed from your or your company’s returns?
HMRC’s Digital Disclosure Service allows people to bring their affairs up to date where mistakes have been made or things have been missed in the past. HMRC has run a number of ‘campaigns’ such as the let property campaign, and the card transaction campaign, but for the DDS you don’t need to qualify for a specific campaign to make a disclosure bring things up to date.
Do you need to tell HMRC if they haven’t already caught up with you?
Yes. There are a number of reasons why.
HMRC now gets a massive amount of information from a significant number of sources such as DVLA, HM Land Registry, Banks, Credit Cards, Financial Institutions and many others. A system, called ‘connect’ ties information together and the information is used to highlight discrepancies in tax returns, or find people that haven’t already registered to pay tax.
The second reason is that the financial penalties are significantly lower if you approach HMRC before realising that they are going to approach you. Penalties for untaxed UK income or assets can be up to 100% of the tax if the loss of tax was deliberate – so securing the maximum discount is a must. Penalties vary on the behaviour causing the tax loss – from nothing if it was a simple mistake and the person acted reasonably and more for careless behaviour. Discounts are given for unprompted disclosures and then also for other behaviour types, called ‘giving, helping and telling’ during the period of disclosure.
Thirdly, tax investigations and tax enquiries can be extremely stressful if not handled properly. By coming forward first, and making an unprompted disclosure, engagement with HMRC is usually much less, meaning the stress and anxiety is far reduced. The process is shorter, and your adviser retains much more control.
And, importantly, HMRC encourage voluntary disclosure, and the risk of prosecution for tax offences if you come forward first, is all but wiped out.
A HMRC (Her Majesty’s Revenue and Customs) letter head surrounded by British bank notes and coins.We have significant experience gained across a number of years so that we can help you determine what needs to be disclosed, across what period of time and what is the lowest appropriate penalty (if any). Of course, we can also do the analysis and submit the disclosure on your behalf. If you are worried, come and speak to us.
So, if you are in any doubt as to whether you may have an undeclared tax liability, come and speak to us. We can help you determine whether there is something you need to tell HMRC about and then take you through that process with minimal fuss.