Should i tell HMRC

Should i tell HMRC

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It has come to my attention that an ex client of mine has incorrectly filed his tax return. When i contacted him to see if he needed the partnership details for his return he said he had filed it without them. I pointed out he should change this, but he said he did not care. Should i report him to HMRC for filing an incorrect return? My thoughts are i should.

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By duncanedwards
21st Jan 2015 15:28

I'm not an expert ...

I'm not an expert but from what experts have posted in previous responses, I would say you need to make a report - just not sure who to.

I'd have a word with your Institue.

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David Winch
By David Winch
21st Jan 2015 15:42

Not to HMRC

I think you would be in breach of (ex) client confidentiality if you reported this to HMRC.

If you consider that the client is being dishonest in failing to correct his return & he has gained a benefit (such as a reduced tax bill) from his dishonesty then you need to report this to the NCA under MLR 2007 / s330 PoCA 2002 (unless one of the exceptions applies).

Your report goes onto a database at the NCA which is accessed by HMRC, DWP, the police, etc.

David

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By BroadheadAccountants
21st Jan 2015 15:50

HMRC

Would HMRC not pick this up anyhow when their system compares the individual return to the private tax return?

Careless client... wouldn't miss them!

 

Agreed Anti-Money Laundering disclosure.

 

 

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By matt12341
21st Jan 2015 16:11

Give him another chance to change it

If, as David says, you consider that he has gained a benefit and is being wilfully dishonest I think that you need to put it in writing to this ex-client that you have a duty to tell the NCA under MLR 2007, but that this also allows you to not if he just amends it himself, and thus avoids hassle with HMRC. Unless you fear for your personal safety in such a circumstance.

There is always the AAT ethics line at 0845 863 0787 if you are still unsure, this is only for AAT members but they may still give you advice even if you aren't.

http://www.aatethics.org.uk/code/wp-content/uploads/2014/09/AAT_Code_of_...

may also be helpful.

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Replying to Cloudcounter:
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By duncanedwards
21st Jan 2015 16:54

Tipping off??

matt12341 wrote:

If, as David says, you consider that he has gained a benefit and is being wilfully dishonest I think that you need to put it in writing to this ex-client that you have a duty to tell the NCA under MLR 2007, but that this also allows you to not if he just amends it himself, and thus avoids hassle with HMRC.

 

Again, just going on recollections of what I have read, might that not constitute "tipping off"?  Will the OP actually ever know if the return is corrected?  All he seems to know (for sure) is that an incorrect return has been made and the ex-client knows that.  Absent evidence of the correction, the suspicion surely remains?

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By ireallyshouldknowthisbut
21st Jan 2015 16:19

.

HMRC will spot it anyway.  They are fairly good at routinely picking up this sort of an omission assuming the partnership has been filed.

They seem to treat it like missed PAYE or other data, ie fairly automated. 

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By matt12341
21st Jan 2015 16:37

If that's so.....

If that is so ireallyshouldknow... then you should definitely write a letter to this former client duncanedwards, advising him that HMRC will pick this up, and that he should rectify it as soon as possible to avoid any penalties.

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By Anne Robinson
21st Jan 2015 17:42

I was always under the impression that you were not allowed to tell someone you were making a ML report - have I got that wrong?

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David Winch
By David Winch
21st Jan 2015 18:20

Tipping off

I would generally advise against telling anyone outside the firm that a report has been made or is intended to be made to the NCA under MLR 2007 / s330 PoCA 2002.  Not least because that news is unlikely to be well received & is unlikely to be of assistance.

So I would not advise telling the client (or ex-client) & I would not advise telling the new accountant about the report on handover.

However I would advise telling the new accountant on handover the issues which have arisen with the ex-client. I just would stop short of including " . . . and I have reported this to the NCA".

As far as the law is concerned, it can be a criminal offence under s333A PoCA 2002 (the "A" is important!) to inform someone outside the firm that a report has been made (either internally to the firm's MLRO or externally to the NCA).

But it's not an offence to inform someone that you intend to make a report (but haven't done it yet).

Wouldn't that be a great way to shatter your relationship with the client & put yourself in the hot seat to be blamed for any problems the client has in future with HMRC or anybody else?  Wouldn't the disgruntled client love to tell everyone he meets just how awful you are & what trouble you have caused him (without any of that being caused by the client himself, of course)?

Not recommended!

David

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By Susan Frank
28th Jan 2015 14:49

Tipping off

Hi everyone

My understanding is that you don't tip off - it sounds like the ex-client is avoiding the declaration assuming he wont get caught ! He will  - either by HMRC or by a ML report - which should ( I suggest)  be filed - if only to protect you ( ie you told him that the partnership income should be included)  - he chose not to  include the income  on his return  and that quite simply is tax avoidance  =  ML report..

I would not tip the client off by writing to him - you have already advised him of the possible liability - I don't see you have a choice to be honest.

 

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Replying to pauljohnston:
By flurrymc
28th Jan 2015 15:26

not tax avoidance

Susan Frank wrote:

 he chose not to  include the income  on his return  and that quite simply is tax avoidance  =  ML report..

 

Not tax avoidance, tax evasion - there is a difference despite what HMRC and polititians like to imply.

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Replying to Paul D Utherone:
By Susan Frank
29th Jan 2015 17:12

Sorry - you are quite correct - i typed the wrong one! 

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By geoffwolf
28th Jan 2015 15:42

Complete ommission?

John Henry

Do you mean that no details of partnership income have been included in the individual return? Or did the ex client mean that he had return partnership income without reference to you and ascertaining that the info he had returned was correct? 

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