Making a disclosure
Most tax investigations will be resolved by a mixture of telephone calls, emails, correspondence and meetings. Depending upon the facts and with my assistance, I may advise you to make a statement to HMRC (otherwise known as a Disclosure). By making a Disclosure, we can marshal all the facts and take time to consider what we want to say and how to say it. A stark contrast to being challenged unexpectedly in a meeting when you will be under pressure.
Making a Disclosure can be voluntary (i.e. unexpected) or prompted (i.e. expected, being triggered by other events ). Voluntary Disclosures used to be rare but are far more common nowadays. Often more credit is given to a taxpayer by HMRC if an unprompted Disclosure is made. Moreover, if tax is found to be due and a Settlement is necessary, penalties will be less for an unprompted Voluntary Disclosure.
There is written guidance as to what should be included in an Outline Disclosure but not in any other type of Disclosure. You will therefore be reliant on the experience of your adviser.
Based on experience, a taxpayer might consider including all or some of the following details:
The detailed mechanics of what was done and how it was done can be provided at a later stage to HMRC. The purpose of making a Disclosure can be to focus on what has happened. A Disclosure should include all relevant facts in a considered way rather than answering quick fire questions in a meeting.
A Voluntary Disclosure can be no different to any other Disclosure other than it is done without being prompted by HMRC. The same approach should be considered in its preparation and content.
Under the CDF, a taxpayer can make an Outline Disclosure. The structure and headings of an Outline Disclosure that HMRC expects is set out on the accompanying forms. A taxpayer is required to make a full, written Outline Disclosure of all tax irregularities within 60 calendar days of the date of the letter from HMRC making the offer of the Contractual Disclosure Facility (CDF).
The number of disclosure facilities available at any one time varies and are listed on HMRC’s website. Disclosure facilities have offered a practical way of bringing a taxpayer’s affairs up to date. The media often mistakenly refers to such disclosure facilities as amnesties which they are not as all taxes need to be paid, plus interest and penalties. Unless specifically stated as part of the terms of the disclosure facility, taxpayers are not immune from prosecution.
The Let Property campaign
The Let Property Campaign has been available since December 2013. This campaign is an opportunity for landlords who owe tax through letting out residential property to regularise their tax affairs. The property can be either in the UK or overseas.
The Worldwide Disclosure Facility (WDF)
The WDF is used to disclose a UK tax liability that relates wholly or in part to an offshore issue and was opened on 5 September 2016.