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!