Voluntary Disclosure - How far back do you go?

Voluntary Disclosure - How far back do you go?

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I have a new client with undisclosed rental income over 16 years and they will be making a voluntary disclosure.  How far back does the HMRC expect us to go, 6 or 16 years?  There is limited information on voluntary disclosure of direct taxes in the HMRC website.  Any advice would be appreciated!

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By rajindersingh
19th Feb 2011 11:08

As far back as is needed

I did one recently going as far back as 18 years.  I think initially you should make a disclosure to HMRC making them aware of the undisclosed income and the number of years it relates to and literally ask them how far back they want you to go.

Some offices at HMRC are quite flexible and are happy for a disclosure to be made by way of a schedule whereas others will insist on form filling and completing each individual return.

All the best.

Raj Singh

Chartered Tax Adviser




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By isanderson
20th Feb 2011 20:47

Time limits

The period you need to go back depends on HMRC's ability to assess. Under the new time limits HMRC can assess back 4 years where an under assessment of tax has arisen due to a mistake, 6 years for careless behaviour on the part of the taxpayer or 20 years for deliberate action by the taxpayer to understate their liability. If your client has failed to disclose rental income received then HMRC are likely to be able to demonstrate your client has at least been careless and assess the past 6 years. Any more than this will depend of the facts of your clients particular situation and whether you are able to convince HMRC (or ultimately the tribunal if necessary) that the under assessment was not down to a deliberate action by your client.

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By fozia
21st Feb 2011 11:38

Thanks to all!

All your advice has been very useful.  Thank you!

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