Taxes: Honesty is the best policy

Whether you are self-employed, run a business, are a property landlord, an investor or have overseas income and gains, mistakes can occur when dealing with your taxes, reporting and making the relevant disclosures to HM Revenue and Customs (HMRC).

Whilst the idea of making mistakes and errors can be worrying and of concern, so long as you declare any omissions and unpaid tax to HMRC with the view of ‘putting things right’ (also known as a voluntary, unprompted disclosure), your penalty position (if any) with HMRC should be mitigated as far as possible.

If you do omit, make a mistake and/or errors when disclosing the information on your annual Self Assessment tax returns, the best course of action is not to ignore this but to look at amending the respective return, or making a full voluntary disclosure to HMRC as early as possible.  Where the disclosure made is ‘unprompted’ (i.e., whereby you contact HMRC first as opposed to the other way round), this can have a significant impact upon how HMRC view the disclosure and the potential penalties (based upon the behaviour exercised) that may be levied.  A disclosure is unprompted if it is made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the inaccuracy, under-self-assessment, failure to notify, deliberate withholding of information or wrongdoing.

There are various voluntary disclosure campaigns, split into offshore and onshore disclosures, which can be made to HMRC including the following:

• The ‘Let Property Campaign’
• The ‘Digital Disclosure Service’
• The ‘Worldwide Disclosure Facility’

Voluntary disclosures can be made to HMRC whether you are an individual or company and want to make a disclosure about:

• Income Tax
• Capital Gains Tax
• Inheritance Tax
• Corporation Tax
• National Insurance Contributions
• Annual Tax for Enveloped Dwellings (ATED)

You can make a disclosure about errors you have made:

• Despite taking reasonable care to make sure you have paid the right amount of tax
• Through carelessness
• Through deliberate actions

At Whitings LLP we specialise and have experience in making a variety of unprompted (and prompted) voluntary disclosures for both existing and new clients, with staff members having been ex-HMRC Inspectors, so please do get in contact should you need to make any type of disclosure or amendment to HMRC in order to bring your personal and/or your businesses tax affairs fully up to date with HMRC.

Disclaimer - All information in this post was correct at time of writing.