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Business Tax, Enquiries, HMRC, Personal tax, Taxation

If you have underpaid tax, it’s time to get your affairs in order

RJP LLP By RJP LLP
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Earlier this month it was confirmed by HMRC that all UK overseas territories – The Cayman Islands, Anguilla, Bermuda, the British Virgin Islands, Jersey, Guernsey, Gibraltar, Isle of Man, Montserrat and the Turks and Caicos Islands – now have in place automatic tax disclosure deals with the Government. This means they are automatically exchanging financial information with the UK and France, Germany, Italy and Spain to identify taxpayers who are under-declaring their income.Under the terms of these automatic information-sharing arrangements, all the countries involved agree to provide greater levels of information about bank accounts held by taxpayers in UK related jurisdictions. The level of information to be exchanged is detailed and will include names, addresses, dates of birth, account numbers and account balances. It will also include trust fund information and details of payments made into or from accounts or trusts. Back in the UK, in order to validate the accuracy of what is shared, HMRC has a team of specialist investigators working in its Offshore Co-ordination Unit whose job is to review this information and compare it with existing records held, which will for example include tax returns submitted.

In most cases, if HMRC identifies a discrepancy, the taxpayer will have the chance to make a disclosure before a full investigation is launched. If this happens, HMRC will follow the Contractual Disclosure Facility investigation process. This means that if there is a tax underpayment, you could be liable to pay up to 200% of the tax liability arising. You may also lose the right to anonymity – we have all seen HMRC’s lists of its ‘most wanted’ taxpayers publicised in the media.

It is clear that the Government intends to continue its efforts to reduce tax avoidance and identify every possible opportunity to secure additional revenues for the Treasury, in order to reduce the Budget deficit. Our advice to clients with offshore accounts is to ensure they have declared all income generated. If they have not already done this, then they should take full advantage of the potential to make a voluntary disclosure to HMRC. Making a voluntary disclosure of tax underpaid will ensure you do not face excessive penalties for tax evasion. It can also reduce the threat of a full investigation being launched, together with the potential for a criminal prosecution. When making a voluntary disclosure, you can expect to pay a fixed penalty of up to 20% of unpaid tax in addition to the amount of underpaid tax that is outstanding, and the interest arising on that underpaid tax.

If you think you may have under-declared your income and owe additional tax to HMRC, please contact us. We can advise you on the best way to make a voluntary disclosure and help you to get your tax affairs in order. Contact Lesley Stalker by emailing las@rjp.co.uk.

How to get onboard with RJP
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Here’s what our clients have to say
Hear directly from our clients about how RJP's personal, straightforward approach has made all the difference in their business and personal success.
"I just wanted to drop you a short note to say how grateful I am for the support that RJP has provided over the past 4 weeks while our Financial Controller was away. I struggle to comprehend how much work your staff get through during their weekly visits and they are always a pleasure to have around the office."
"I wanted to write and express our gratitude for your help and hard work in getting Probate through and settling all the taxes. I am so pleased that we selected RJP, as your professional help and updates throughout this process have been invaluable. If at any time in the future Probate assessment may be needed, you will be our first port of call. Once again, many thanks to the whole team."
"I would like to take this opportunity to thank you very much for the amazing job you have done navigating us through this whole process. My family and I also really appreciate the care and compassion demonstrated by you and your team in every dealing. Our thanks to everyone."
"Just a quick e-mail from me to thank you for achieving the target for producing the draft accounts – it is very much appreciated and gives a first class impression of your firm. Many thanks."
"RJP provide our company with a complete service which takes the stress and strain away from the day to day running of our accounts! Their understanding of our business and their patience and advice is invaluable."
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    FAQs
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