HMRC Voluntary Disclosure Opportunities – The Facts

Author

Ryan Conlon

Ryan qualified as a Chartered Tax Adviser with a Big Four firm before continuing his tax career at national firms and HMRC’s Fraud Investigation Service.

Understanding the Current Prompted, Unprompted & Voluntary HMRC Disclosure Opportunities – Tax Help & Advice

For many years, HMRC has offered disclosure opportunities, inviting those with undeclared income to come forward and settle with HMRC…

From HMRC’s perspective, disclosure opportunities are attractive, shifting the workload toward the taxpayer, leaving them to check the details. From the taxpayer’s perspective, disclosure opportunities, while varying in their terms, are preferable to waiting until HMRC opens and enquiry or investigation and offer the chance to mitigate the penalties that would otherwise be imposed.

We highlight below currently open campaigns.

Let Property Campaign

The Let Property Campaign is focused on residential property landlords, whether single or multiple properties. It applies to non-resident landlords too; however, it does not apply to companies or trustees.

The campaign was launched in August 2013, initially for a period of 18 months, but then extended.

Following registration, taxpayers have three months to make a disclosure and pay the tax, interest and penalties due.

If the taxpayer is registered for self-assessment, the maximum number of years that will need to be disclosed is 6 years, on the basis that the failure to disclose was careless, no matter how long they have been receiving rental income. If, however, the failure was deliberate, or if they had failed to notify HMRC and register for self-assessment at all, then HMRC could go back up to 20 years.

Digital Disclosure Service

The Digital Disclosure Service offers a disclosure route for individuals and companies who wish to make a disclosure but who are not covered by a specific HMRC campaign.

There are three stages:

  • Notifying HMRC that you intend to make a disclosure;
  • Preparing and submitting the disclosure within 90 days;
  • Making a formal offer to HMRC together with payment of the tax, interest and penalties due.

Profit Diversion Disclosure Facility

HMRC launched the profit diversion disclosure facility tor multinationals whose transfer pricing arrangements might bring them within the scope of the Diverted Profits Tax.

The facility permits companies to register before HMRC opens an investigation, submit a full report and pay the tax within six months of registration.

To benefit from the maximum penalty reduction disclosure is to be required by 31 December 2019.

Contractual Disclosure Facility / Code of Practice 9

Where HMRC suspects tax fraud, it may offer the Contractual Disclosure Facility, also known as Code of Practice 9 (COP9), inviting a taxpayer to make an outline disclosure within 60 days and, subject to a satisfactory outline disclosure being made, agree not to undertake a criminal prosecution.

It is also possible in cases where there has been a deliberate loss of tax to approach HMRC and to ask for the Contractual Disclosure Facility. If accepted, and if a valid outline disclosure is made, the same terms apply.

The process is onerous and is operated by HMRC’s Fraud Investigation Service.

HMRC are likely to want to meet with the taxpayer, though this can sometimes be avoided.

They will also, other than in the simplest of cases, wish the taxpayer to commission a comprehensive disclosure report.

The process needs to be handled with extreme care, especially in respect of signing any documents at the end such as the Certificate of Full Disclosure. If false information is given to HMRC on such documents, they could choose to prosecute.

Disguised Remuneration Settlement Opportunity

While not strictly a disclosure route, the disguised remuneration settlement opportunity offers participants in contractor loan schemes, employee benefit trusts and other forms of disguised remuneration, the ability to settle with HMRC so that loans received through these structures are treated as taxable in the years that they were actually received.

For many individuals, this will be more favourable than allowing the 2019 loan charge to arise on 5 April 2019.

Strictly, settlement needs to have been reached with HMRC by 5 April 2019 to prevent the loan charge from arising.

However, HMRC has more recently relaxed the conditions so that if you provide the information required to HMRC by 5 April 2019 to reach a settlement, and you subsequently do settle, you will be treated as satisfying these conditions.

Next steps

Should you require assistance with HMRC investigations, disclosures settlement opportunities, please let us know. You can also read more about Tax Investigations below…

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