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Is The Digital Disclosure Service (DDS) Mandatory?

Would Rather Use Pigeon Post For Small Omission. Have used DDS Once And It Seems A Right Pain!

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My clients by and large are extremely well-behaved and honest. Up to about a month ago, I cannot remember the last time I had to advise HMRC of serious omitted income.

I must admit to having buried my head in the sand about the Digital Disclosure Service (DDS), because it has been of little relevance to my clients up until recently.

However, around 6 months ago, one of my clients was advised by his stockbroker that they had failed to advise their clients of a certain item of offshore fund income for 2016/17, which the broker had omitted from the annual tax pack. For my client the income amounted to £15.

Due to the nature of the income, and the fact the stockbroker was caught out for many clients, I would bet HMRC are given a list of the relevant broker's clients, names and addresses, national insurance numbers and their omitted income. In other words, HMRC will be aware of the offshore income omissions, so it is difficult to turn a blind eye to it.

Now the extra income tax payable on the £15 is a mere £3. What a pain. So all I did 5 months ago was revise the 2016/17 tax return for the omission, post the paper tax return revision to HMRC alomg with a covering letter explaining the full facts to HMRC and got the client to pay the extra £3 to their self assessment account. A doddle of a job.

I completely forgot about this until I opened the client's file today. HMRC have not processed the revised 2016/17 tax return, so online records is showing a £3 overpayment, and HMRC have not responded to my letter yet (I have a gut feeling HMRC may never respond).

I am now wondering what to do about this. What will HMRC do about the revised paper 2016/17 tax return? Nothing? Will they expect me to instead disclose the £15 omission on the DDS, with all of the time and energy that will expend for a trifling £3 in extra tax.

What I do know is that the HMRC call centres are still advising people to revise 2013/14 to 2016/17 tax returns for omitted income by sending in paper tax return revisions to HMRC through the post. Is this still correct advice?

Has anyone used the DDS yet. Oh, what a pain it is!

 

 

 

Replies (8)

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By the_drookit_dug
16th Oct 2019 19:28

I am 99.9999% certain HMRC will not seek to collect this. Just send a chaser letter and forget about it.

P.S. The Professional Conduct in Relation to Taxation guidance suggests £200 as a threshold below which amounts may be considered trivial (although I personally would seek to correct amounts below this). You're safe at £3 underpaid tax.

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Replying to the_drookit_dug:
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By the_drookit_dug
16th Oct 2019 19:32

P.P.S. Additionally, does the Professional Conduct in Relation to Taxation guidance not state that you have no obligation to chase up HMRC to act once you've made a disclosure?

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Replying to the_drookit_dug:
By penelope pitstop
16th Oct 2019 20:18

I certainly hope you are correct!

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Replying to the_drookit_dug:
By penelope pitstop
16th Oct 2019 20:19

I certainly hope you are correct!

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Replying to the_drookit_dug:
By penelope pitstop
16th Oct 2019 21:18

There is a horrible echo around here!

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By Wanderer
16th Oct 2019 19:39

£15 omitted income.
£3 tax at stake.
YOYOYOY did you do start disclosing?

I'd have made a file note and moved on.

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Replying to Wanderer:
By penelope pitstop
16th Oct 2019 21:39

Thanks.

I take your point, but the stockbroker evidently thought the £15 was important enough to tell client and pay the cost of a first class stamp to post to client.

Having carefully looked at the stockbroker's covering letter a second time, they did advise client to disclose to HMRC using:

https://www.gov.uk/guidance/requirement-to-correct-tax-due-on-offshore-a...

I can tell you something though. If I am required to use the DDS to report £15 worth of foreign income, it will cost an awful lot more than the £3 lost tax in my accountancy fees to use the DDS, answer all of the questions, work out the tax payable, work out the interest lost, work out the penalty chargeable and agree with client a settlement figure to offer HMRC etc. etc.

I have not however taken any steps to start the DDS process yet.

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Replying to penelope pitstop:
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By Wanderer
16th Oct 2019 21:22

That's where you've gone wrong.
Stockbroker is **** covering and / or sending a standard letter.
Personally I don't take advice from stockbrokers on how I should deal with HMRC.

My advice is just file it and move on. You've done MUCH more already that most advisers would.

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