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Voluntary disclosure is being open and transparent to HMRC if you know your accounts and finances are not correct for whatever reason, without being asked.
Most individuals and companies want to pay the correct amount of tax. However, in some cases, errors will occur resulting in some paying less than they should.
Voluntary disclosure provides the means for those who are not paying the correct amount of tax to rectify matters and bring their payments up to date and is easily done online.
Should I Voluntarily Disclose Information to HMRC?
Whether you’re self-employed or run a business, when it comes to finances, it is always best to be honest. Managing your taxes can be time-consuming. Sometimes unintentional mistakes can happen.
As long as you declare your unpaid tax, you should remain penalty-free. Once you have made the voluntary disclosure, there is no longer anything to show that you are hiding any illegal activities.
The most severe penalties and legal actions that can arise are all to do with non-disclosure of activities suspected to be involved in deceit, tax avoidance or fraud.
When Should I Consider Disclosure of Financial Details?
You should consider a voluntary disclosure of your accounts to HMRC if you are aware of non-compliance within your tax returns or financial reports. But this applies only to those that have already been submitted. If there are problems with your accounts that have not been submitted yet, you have not provided them with inaccurate information which negates the need for any disclosure.
Disclosure could be to cover anything where your tax information is inaccurate. For example, it could concern misinformation on income, inheritance or capital gains tax, a shortfall of payments towards National Insurance contributions, an error in claimed expenses or charity contributions.
What Happens if I Don’t Voluntarily Disclose Information?
Failure to disclose tax inaccuracies can have various outcomes.
If you are never audited by HMRC, then they will be none the wiser. Even if you are aware of inaccuracies but there is no evidence to say that you are, then if you are audited, you will simply receive an outstanding bill from HMRC.
Where it’s obvious that you know of disclosures you should have made, or that you actively engaged in activities to avoid your liabilities and HMRC finds out expect to receive harsh penalties and possibly a criminal prosecution. If you are discovered, it would be harmful, both for you and your business.
Unsure what to do?
Whatever position you are in, give the team a call for more information or to discuss your situation.
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Disclaimer: Information provided by Kidwells Accountancy on our website is for informational purposes only. It is provided in good faith but we make no guarantee of any kind regarding the accuracy, reliability, or completeness of any information on our site. We always recommend businesses seek independent legal and financial advice before working with us or acting on any information on our website.