UK tax disclosures and investigations

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Our UK tax investigations team can help you to make a voluntary disclosure to HMRC, to avoid a HMRC tax investigation, survive one that’s underway, or assist in reducing any penalties imposed by HMRC.

Whether it’s a routine tax return check, or a formal enquiry due to non-compliance, finding yourself at the heart of a UK tax investigation or dispute by HMRC can be disruptive and costly. You may feel anxious, helpless and misunderstood, caught in a seemingly never-ending process, which makes it a good time to enlist the support of our experts.

How will HMRC find suspected irregularities?

Common Reporting Standard (CRS) 

HMRC has access to a great deal of information both within and outside the borders of the United Kingdom. The Automatic Exchange of Information regimes allow participating jurisdictions to share information with each other about income earned and assets held overseas by residents of each country.  The Common Reporting Standard (CRS) is a reporting model imposed from 2016 in the UK by the European Directive on Administrative Cooperation (DAC). The CRS enables the exchange and access of certain financial information, including overseas accounts and investments held by UK taxpayers, between tax jurisdictions under the Organisation for Economic Co-operation and Development (OECD). 

Ahead of HMRC receiving the CRS information, it introduced new legislation called the Requirement to Correct (RTC). This allowed taxpayers to correct their tax irregularities by 30 September 2018 before HMRC acted on information received under the CRS. For more information on HMRC’s powers, penalties and how we can help, please click here.

Failure to Correct (FTC)

Disclosures made after the RTC deadline, when disclosing irregularities for tax years up to and including 2015/16, are subject to FTC penalties. These are significantly higher than standard offshore penalties but can be reduced by submitting an unprompted disclosure, making it even more crucial to disclose irregularities as soon as you’re aware of them, and before HMRC nudges or prompts you to disclose.

The minimum penalty for an unprompted voluntary disclosure under FTC is 100% of the unpaid tax, provided the disclosure is full and accurate. The maximum penalty for a prompted disclosure under FTC is 200% of the unpaid tax. By submitting a full and accurate prompted disclosure, an FTC penalty can be reduced to 150%. It is, therefore, imperative that you make an unprompted voluntary disclosure to reduce the penalties you could receive.

Compliance checks

HMRC carries out compliance check investigations to make sure declarations made on an individual’s tax return accurately reflect their position for that tax year. Compliance checks can either target a particular aspect of your tax return (known as an aspect enquiry), such as a claim for relief or a specific item of income, or they can be a full enquiry into all areas. Once an enquiry has been resolved and if inaccuracies are identified HMRC may impose penalties. These are tax geared and can go up to 200% of the tax that is due. 

What should you do if you have concerns regarding your UK tax affairs?

Voluntary disclosures

If any UK tax irregularities are identified, we strongly recommend making a voluntary disclosure to HMRC with specialist advice. It’s always better to make a voluntary disclosure relating to previously undisclosed income, rather than waiting for HMRC to find you. If you willingly disclose the error or misdemeanour, your penalty exposure will always be lower. 

Let Property Campaign

There is a special disclosure facility available to those who live abroad but own UK property, the Let Property Campaign. This method of disclosing previously unreported property-related income may be the best solution for you. Get in touch and one of our experts will talk you through it.

How we can help

We regularly assist clients with all HMRC tax investigation matters and disclosures. If you need assistance making a prompted or unprompted disclosure to HMRC, we can help by: 

• Reviewing and confirming your UK tax status and determining whether any foreign income and gains you have received should have been declared.
• If we conclude that you should make a disclosure, we’ll prepare and submit a disclosure under the Worldwide Disclosure Facility or Let Property Campaign, that minimises your exposure to unnecessary tax, interest and penalties.
• We will also take steps, from the outset, to reduce the extent of any potential enquiry, and mitigate any financial and non-financial penalties that could be applied.
• If needed, negotiate a time to pay arrangement that is affordable according to your needs and personal circumstances.

To date, our involvement in such cases has prevented clients from being named and shamed as tax evaders or criminally prosecuted.

For professional advice tailored to your unique circumstances, please fill out the form below and one of our experts will be in touch to discuss your requirements and how we can help. Please note that our advisory services are charged at our hourly rates and a formal engagement will need to be in place before any advice is provided.