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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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.
Can't you 'pop in' and see the client? You can explain the problem face to face and come away with everything signed.
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.
I would not do that.
What would you do then if the client call you again and say "sorry, that was incorrect my bad"