Practical tip required - order of play
Client's father died intestate in 2001-02 tax year. Following a deed of variation, client has an absolute entitlement to certain investments and income arising from date of death. None of that income has been shown on client's personal tax returns (nor provisional disclosures). Client is higher rate taxpayer in each year. Estate accounts have only recently been produced by solicitor, and I understand that income has been reported by solicitor on estate tax returns that I have yet to see (but of course no higher rate tax paid). No R185s have yet been produced.
This is a complex case and I reckon it will still take several weeks to sort out the s.33 disclosure for 2001-02 and 2002-03 and repair 2003-04, although we could probably arrange an estimated payment immediately.
My concern is timing of disclosure. HMRC has sufficient information already in hand, if they got their computers to talk to each other, to realise that there has been an underpayment of tax. In reality I judge it unlikely that they will take notice before I am able to finalise the amendments and report accordingly, although there is of course always a chance.
If they raise a s.9A enquiry before I bring the matter to their attention it could prejudice penalty mitigation.
There is every intention to put the matter straight, and I am confident that there is no criminal intent that might require NCIS involvement.
So, should I take the risk and wait until I can put the full facts before HMRC, or should I submit a vague disclosure now, to be followed in due course by details? The latter would appear to protect the client against the (unlikely?) event of a S.9A enquiry in the next few weeks. But are there any downsides to that approach?