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Notify HMRC Omitted Income Pre-Engagement Letter?

Could Difference of a Day/A Week Make a Difference to Penalties Etc - I Suppose So. What You Think?

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Existing client told me over the phone he wants to disclose omitted income covering around 8 tax years.

I was just busying myself drafting a fresh Engagement Letter for this extra work and also drafting supporting correspondence explaining to the client the ins and outs of failure to disclose and back tax, interest and penalies etc.

It is taking and age doing all this, and it suddenly struck me that if HMRC were to jump the gun and instead of a voluntary disclosure "prompt" the client to disclose, then the penalties charged could be a lot higher.

Client is also likely to sit on Engagement Letter for a week or two due to old age and infirmity.

I am now thinking of "Notifying" HMRC of my client's intention to make a disclosure without client's signed engagement (his written authority to me to divulge to HMRC).

Do any readers see any dangers in starting the Digital Disclosure Service (DDS) now before I have my client's written authority to proceed.

Could he sue if he were to change his mind (I think this highly unlikely, but you never know).

Replies (9)

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By the_drookit_dug
14th Sep 2019 08:09

You must have the client's authority to make a disclosure to HMRC.

He's had 8 years to come clean. It can wait another few weeks - if HMRC enquire in the meantime, then that's just bad luck.

Thanks (1)
Replying to the_drookit_dug:
By penelope pitstop
14th Sep 2019 15:53

Thanks for comment.
But it's that sort of income which is easily reportable by the paying entity to HMRC.
Typical if HMRC found out about it before I "notified" HMRC about it.

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Replying to penelope pitstop:
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By the_drookit_dug
14th Sep 2019 17:11

I would at least seek the client's emailed approval to notify HMRC

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Replying to the_drookit_dug:
By penelope pitstop
15th Sep 2019 00:59

Client is so old he is not au fait at all with the dark arts of basic computer skills/his computer appears to be on Windows 7 with its commensurate problems/his email &/or his computer work intermittently, it looks like he will be unable to email me anything of any merit to give me authority to "Notify" HMRC.

His inability to deal with emails forms a major part of the reason why he has got into the problem of undisclosed income in the first place!

So, it looks like good old Royal Mail will have to do.

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Replying to penelope pitstop:
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By Vaughan Blake1
16th Sep 2019 12:44

Can't you 'pop in' and see the client? You can explain the problem face to face and come away with everything signed.

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Replying to Vaughan Blake1:
By penelope pitstop
16th Sep 2019 13:00

400 mile round trip (at least) !

Just been on the phone and told him he'll have the bundle of information to sign etc. tomorrow (Tuesday). He said he'll set the weekend aside to deal with it.

I said I would rather he deal with it tomorrow (Tuesday) and send it back to me in the stamped address envelope enclosed. Let's see what he does.

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By gainsborough
14th Sep 2019 10:06

I agree with the above comment. I would tell the client that he should return any documents (LOE etc) to you immediately as you cannot make a disclosure until he does this and point out that HMRC will charge much higher penalties if they discover the error in the meantime. Send an SAE too, so he doesn't have to go to the Post Office to send back to you.

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Replying to gainsborough:
By penelope pitstop
14th Sep 2019 15:53

Good points.
Thanks.

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By Malek
15th Sep 2019 11:26

I would not do that.
What would you do then if the client call you again and say "sorry, that was incorrect my bad"

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