Voluntary disclosures are made when a taxpayer realises they need to correct past mistakes or omissions in their tax affairs. This means you are taking the first step to resolve the issue, before HMRC prompts you to do so.
There are two types of disclosure:
Prompted disclosure
This happens when HMRC contacts you first. You are required to provide information about a specific tax issue they have identified.
Unprompted (voluntary) disclosure
This is when you approach HMRC yourself to correct a mistake or declare unpaid tax. This approach typically results in lower penalties and shows HMRC that you are co-operative and proactive.
HMRC also runs specific campaigns and facilities that encourage voluntary disclosures. These include:
Making a voluntary disclosure gives you more control over the process and outcome. It allows you to:
We can help assess whether a disclosure is necessary and guide you through the process from start to finish.
We were approached by a client who had recently realised he had incorrectly reported his occupational pension scheme contributions on his tax return. Whilst the tapering provisions had been considered, he had failed to calculate and report the annual allowance charge (AAC) which applies when total contributions exceed the annual allowance.
Our client had filed the previous year tax returns incorrectly and as there was no AAC reported, had filed these returns with an underpayment of tax.
We worked with our client to understand the position as it stood and how it had been reported to HMRC, compared with the correct position, which needed to be disclosed to HMRC. We assisted with a disclosure to HMRC and agreed a low penalty rate as we were able to demonstrate our client was being co-operative.
Our client was confident in knowing that the disclosure had been handled correctly and that the lowest penalty rate possible had been agreed.
Voluntary disclosures often result in lower penalties and a more cooperative relationship with HMRC.
This happens when HMRC contacts you first about an issue (like through a nudge letter). While still beneficial to cooperate, the penalties may be slightly higher than with an unprompted disclosure.
Yes. Even if the mistake was not deliberate, it’s best to correct it voluntarily to avoid interest or penalties.
In cases of carelessness, HMRC can usually only go back up to six years. For deliberate errors, they can look back up to 20 years.
Possibly, but penalties can be significantly reduced based on the quality of your disclosure and level of cooperation. We help present your case clearly to achieve the best result.
