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Why disclose tax irregularities?

By admin
01 May 2014
Tax Investigation
  1. Avoid criminal prosecution: maybe the most important reason! Continued denial or lack of cooperation is a factor taken into account when considering a case for prosecution.
  2. Peace of mind: with increased HMRC powers, investigative techniques including highly sophisticated analysing software and exchange of information agreements with other jurisdictions, it may only be a matter of time before HMRC identifies your tax irregularities.

  3. Present your case: by making a voluntary disclosure you put yourself in the best situation to present your case. Being proactive allows the time and opportunity to agree with your specialist adviser all the areas to be disclosed, understand the technical arguments, consider what evidence would support those arguments, prepare a thorough disclosure and be aware of the likely outcomes in advance.

  4. Scope of disclosure: presenting and agreeing a disclosure or using a disclosure facility may limit the scope and/or period of your disclosure.

  5. Reduce interest and penalties: if handled correctly a voluntary disclosure can result in reduced interest and penalties.

  6. Avoid civil investigation of fraud: where HMRC have offered a tax amnesty, those not taking the opportunity have faced significant civil investigation cases being opened, for example:

    • Tutors and coaches providing private lessons:

      • Voluntary disclosure opportunity closed on 31 March 2012

      • 646 notifications 

      • Over 400 disclosures

    • Businesses with revenue above the VAT threshold that are not registered for VAT:

      • Voluntary disclosure opportunity closed on 31 December 2011

      • HMRC wrote to over 40,000 businesses to highlight the disclosure opportunity

      • 848 notifications

      • As at 30 November 2012, 647 businesses who had registered for VAT through the initiative have submitted their first VAT Return

    • Plumbers’ Tax Safe Plan:

      • Voluntary disclosure opportunity closed in August 2011

      • 638 notifications

      • Over 447 disclosures

    • The Medics Tax Health Plan:

      • Voluntary disclosure closed in June 2010

      • 2160 notifications

      • Over 1,500 disclosures

    • People or businesses using offshore banking:

      • Two campaigns targeting those with any offshore interest, assets or accounts. The latest was in 2009 and the first was in 2007.

      • The 2009 campaign raised £85 million from 5,500 disclosures

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