Do I Need to Make a Voluntary Disclosure to HMRC?

It’s easy to assume HMRC know everything, but much of the UK tax system relies on taxpayers, employers, and sales platforms providing the right information. Realising you might have made a mistake after submitting everything can be a scary feeling, but HMRC actively encourage taxpayers to come forward if they find themselves in that situation.

On a side note, if you do receive a letter from HMRC, it’s well worth double-checking who made the mistake – it might be them!

What types of tax can I make a voluntary disclosure for?

You can make a voluntary disclosure about any type of tax including income tax, Corporation Tax if you run a limited company, Capital Gains Tax, and even National Insurance.

Why might I need to make a voluntary disclosure?

Tax returns can be very confusing documents, so it’s perfectly understandable you might make a mistake. Even a typing error in your bookkeeping records can cause you to report your profit figures incorrectly, and therefore to pay the wrong amount of tax. Making a voluntary disclosure to HMRC can help you amend the error.

When should I make a voluntary disclosure?

You should tell HMRC as soon as you realise a mistake has been made, even if you don’t think you will need to pay more tax. If you’re not sure, try to speak to your accountant as soon as possible so they’re aware, and can advise you on what to do next.

How do I make a voluntary disclosure?

There are several options available for making a voluntary disclosure. HMRC accepts disclosures online through its Digital Disclosure Service. This is a convenient way of informing HMRC a mistake has been made, so they can process and assess it.

What happens after I make a disclosure?

HMRC will normally send out an acknowledgement letter containing your unique Disclosure Reference Number (DRN) within two weeks of receiving your disclosure. They’ll contact you with any follow-up questions or to request further evidence where necessary before deciding whether or not to accept the disclosure you made.

If accepted, you’ll be contacted again with a Payment Reference Number (PRN) so you can pay any additional tax you owe by the deadline shown on the letter.

What information will I need?

If HMRC asks for additional information, you may need to provide annual accounts, bank statements and bookkeeping records. It’s best to be as transparent and cooperative as possible so the process is as disruption-free to your business as it can be.

Penalties for mistakes

You may be hit with a penalty if the mistake or omission was due to careless or deliberate behaviour. The consequences of not reporting a mistake on your tax return could be even greater. That’s why it’s always best to make a voluntary disclosure as soon as you realise there is a problem! While making a voluntary disclosure may be an uncomfortable process, it’s much better to get it done and out of the way.

 
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