Solicitors are the latest professionals to be targeted in a new voluntary disclosure tax campaign started by HM Revenue & Customs (HMRC) today.
The Solicitors Tax Campaign runs from 8 December 2014 to 9 June 2015 and is an opportunity for those working within the legal profession to declare any undisclosed taxes and duties.
Stage 1 – Notification
If you are a solicitor wishing to make a disclosure, you need to notify HMRC of your intention to do so by 9 March 2015. You may be a solicitor making a disclosure about your own tax affairs, on behalf of your company if you are a director or company secretary, or perhaps on behalf of someone else, for example if you are a personal representative of a deceased person or trustee.
Alternatively, you can engage a tax adviser to notify HMRC on your behalf.
Notification can be made by:
- completing an online DO1 notification form
- telephoning HMRC on 03000 013 4749 (Lines open Monday to Friday, 8am to 8pm)
- writing to HMRC at HM Revenue & Customs, Solicitors Tax Campaign S1250, PO Box 3900, Glasgow G70 6AA
Once notification has been made, HMRC will write out to confirm the unique Disclosure Reference Number and Payment Reference Number to be used in all subsequent contact surrounding the disclosure.
Stage 2 – Disclosure
Once the Disclosure Reference Number is known, the full voluntary disclosure can be made anytime up to 9 June 2015.
Disclosure can be made by:
- completing an online DO2 notification form
- printing and posting a completed form to HMRC at HM Revenue & Customs, Solicitors Tax Campaign S1250, PO Box 3900, Glasgow G70 6AA, quoting the Disclosure Reference Number
HMRC expects full payment to be made at the same time as the full disclosure is made.
Payment can be made by:
- direct debit
- debit or credit card
- at a bank or Post Office
- by post
- via internet or telephone banking or CHAPS
Whichever method is used, it is important to quote the Payment Reference Number which would have been issued by HMRC.
If time to pay is required, HMRC expects to be advised before the submission of the full disclosure. HMRC will typically want to know:
- the Disclosure Reference Number
- what assets are owned e.g. property, cash in the bank, investments
- what is owed in the way of mortgages, loans, credit/store card debt
- what the current weekly/monthly income and outgoings are of the solicitor involved
Quantifying the disclosure
This is the most difficult part of any campaign because it involves a judgement of the behaviour of the solicitor who has failed to declare all of their tax liabilities. The behaviour attributable to the underpayment of tax has a direct bearing on both the number of years which have to be included in any disclosure, as well as the level of penalty to be self assessed.
As with all tax campaigns, HMRC will usually not accept voluntary disclosures if:
- they are found to be materially incorrect or incomplete when checked by HMRC
- an enquiry or other compliance check has already begun
- the money that is the subject of the disclosure is from the proceeds of serious organised crime
Once the notification period has closed, HMRC will contact solicitors it believes should have come forward and who have not.
This means HMRC will carry out compliance checks or full enquiries to resolve matters and will generally charge higher penalties than those available under the terms of the campaign. Penalties can be up to 100% of the unpaid liabilities.
If a disclosure has been made which HMRC finds is materially incomplete or inaccurate, then a criminal investigation is considered.
It is important to get experienced tax advice when preparing and quantifying a tax disclosure and Abbey Tax can help. All of the Senior Tax Consultants employed by Abbey Tax are ex HMRC Tax Inspectors and they cover the whole of the UK. For an initial free discussion, please e mail firstname.lastname@example.org and one of our team will get in touch.
Author: Guy Smith, Tax Investigations Manager on the ReSource Tax and VAT Consultancy Team