Contacted by HMRC demanding payment? Voluntary Disclosure of an arrangement can be a quick and effective way to reduce tax payable to HMRC. Our brilliant team includes Partner Stephen Downie (lawyer & accountant) and Partner Andy Lynch (ex HMRC Special Investigator for 18 years). We have all bases covered. Call for a free tax disclosure consultation today.
A tax disclosure allows an individual or business to correct mistakes, omissions or irregularities in their tax affairs. Making a disclosure can reduce penalties, avoid more serious action and help resolve issues on a cooperative basis. Whether the error relates to income tax, VAT, PAYE or corporation tax, early and accurate disclosure is often the best way to manage risk and achieve a fair outcome with HMRC.
At a glance
A tax disclosure is a formal report to HMRC explaining past errors or irregularities and providing corrected figures. Voluntary disclosure can significantly reduce penalties and help avoid investigations. We help individuals and businesses prepare clear, accurate disclosures that meet HMRC’s expectations and lead to fair settlements.
What is a tax disclosure and when should you make one?
A tax disclosure is the process of informing HMRC about an inaccuracy in your tax affairs. It may relate to undeclared income, incorrect VAT returns, PAYE errors or other issues that have resulted in underpaid tax. A disclosure can be voluntary or prompted by HMRC.
You should consider making a disclosure as soon as you become aware of an error. A voluntary disclosure generally leads to lower penalties and helps demonstrate cooperation. If HMRC contacts you before you disclose the issue, the benefits of voluntary disclosure may be reduced.
Summary: A tax disclosure corrects past errors and should be made as soon as you identify an issue.
What types of tax issues can be disclosed voluntarily?
Most types of tax irregularities can be disclosed voluntarily. Common examples include:
- undeclared or incorrectly reported income
- inaccurate VAT returns
- PAYE or National Insurance errors
- incorrect expense claims
- bookkeeping mistakes
- failures to register for VAT
- accounting adjustments that impact tax returns
Disclosures can relate to one tax or several. HMRC expects the disclosure to explain the issue clearly, provide corrected figures and include all relevant years.
Summary: Any past error that has led to underpaid tax can be disclosed voluntarily.
Should you make a disclosure before HMRC contacts you?
Yes. Making a disclosure before HMRC contacts you can significantly reduce penalties and helps demonstrate that you are taking reasonable steps to correct the issue. HMRC views voluntary disclosure as cooperative behaviour. This usually results in lower penalties and may avoid the need for a wider investigation.
If HMRC contacts you first, you must still disclose the issue, but penalty reductions may be limited.
Summary: Early disclosure improves outcomes and reduces the likelihood of further investigation.
How do you prepare a tax disclosure for HMRC?
Preparing a tax disclosure requires a clear narrative explaining what happened and why, supported by financial calculations that show the correct liability. The process often includes:
- reviewing past records and accounts
- calculating the tax that should have been paid
- identifying the years affected
- preparing a written explanation
- gathering supporting documentation
It is important that the disclosure is complete and accurate. Omissions or unclear explanations may lead to follow up questions or a more detailed investigation.
Summary: A disclosure must include a clear explanation and accurate financial calculations.
What information does HMRC expect in a disclosure report?
HMRC expects the report to include:
- a full explanation of the error or irregularity
- the circumstances that led to it
- the tax years affected
- calculations of tax, interest and any penalties
- supporting evidence such as invoices, records or bank statements
- an assessment of the behaviour that caused the error
HMRC will review the report to ensure it is complete. A well prepared disclosure helps reduce the need for further questions and allows the matter to be resolved more efficiently.
Summary: HMRC expects clear explanations, accurate figures and supporting evidence.
How does HMRC assess penalties for tax irregularities?
Penalties depend on HMRC’s assessment of the behaviour that led to the error. HMRC categorises behaviour as:
- reasonable care
- careless error
- deliberate error
- deliberate and concealed error
Voluntary disclosure can reduce penalties significantly. The level of reduction depends on how early you disclose the issue, how cooperative you have been and how complete the disclosure is.
Summary: Penalties depend on behaviour, but voluntary disclosure can lead to substantial reductions.
What happens after you submit a tax disclosure to HMRC?
HMRC reviews the disclosure and may ask for additional information or clarification. If HMRC accepts the disclosure, it will confirm the liability and set out how the tax and interest should be paid. In some cases HMRC may also address penalties at this stage.
Once payment terms are agreed, HMRC will close the matter. The process can take several weeks or longer depending on the complexity of the disclosure.
Summary: HMRC reviews the disclosure, confirms the liability and sets out payment requirements.
Can a tax disclosure lead to further investigation?
In most cases a complete and accurate disclosure will bring the matter to a close. However, if the disclosure is incomplete or if HMRC believes there are wider issues, it may begin a broader investigation. This is more likely if HMRC identifies deliberate behaviour or repeated inaccuracies.
Providing full information at the outset reduces the risk of further enquiries.
Summary: A well prepared disclosure usually resolves the issue, but incomplete reports can lead to further investigation.
Can a business agree a time to pay arrangement after making a disclosure?
If the disclosure results in a liability that cannot be paid in full, a time to pay arrangement may be available. HMRC will consider time to pay requests where the business provides clear evidence of its financial position and a realistic repayment plan.
It is important to raise payment concerns early so that HMRC can consider the request as part of the disclosure process.
Summary: Time to pay is often available if the business can demonstrate affordability.
How does FWJ help individuals and companies prepare tax disclosures?
We help clients review their tax position, prepare clear and accurate disclosures and respond to HMRC queries. Our advice covers both the narrative explanation and the financial calculations. Where necessary, we assist with penalty negotiations and payment discussions to ensure the disclosure is resolved on the best possible terms.
Summary: FWJ provides practical support at every stage of the disclosure process.
Our tax disclosure team at FWJ
No other firm in England has such a unique blend of skill set as our tax defence team.
- Andy Lynch. Andy is an expert on a wide range of HMRC claims and before joining FWJ, he spent 18 years at HM Customs & Excise in their National Investigation Service. His experience is unrivalled in all types of HMRC claims including HMRC investigation defence, VAT claims, R&D tax credit defence, Account Freezing Orders, Tax Disclosure, Code of Practice 8 & 9 claims, winding up petition defence and much more.
- Stephen Downie. Stephen is a Partner and a former ACCA accountant who combines financial expertise with deep legal knowledge to deliver clear, commercial advice. He acts for directors, shareholders, insolvency practitioners and private clients in corporate governance disputes, director disqualification defence, and HMRC-related claims including tax avoidance schemes, PLNs, VAT and PAYE security demands. His focus is always on achieving the best outcome for clients as efficiently and cost-effectively as possible.
- Anita Sharma. Anita is a Senior Associate specialising in tax litigation and financial disputes with HMRC. She advises high-net-worth individuals and major commercial clients on appeals against HMRC decisions, complex tax assessments, and enforcement proceedings. Anita has secured interim relief following HMRC revocations to keep clients trading during appeals and is known for achieving practical, results-focused outcomes in high-value disputes.
- Khaliq Martin. Khaliq is a Senior Paralegal in the tax disputes team assisting on a broad range of HMRC investigation and defence matters. Khaliq draws on his international litigation background and public sector experience to help prepare detailed evidence and submissions for use in appeals and settlement negotiations, ensuring cases are presented clearly, carefully and effectively.
Fantastic firm, nothing was to much trouble. Direct to the point, so helpful would recommend to anyone, I would definitely use them again.
A client that we defended from an HMRC claim
Andy Lynch at FWJ was literally a life saver for me. I ran in to some tax issues with HMRC and I suffer from mental health issues as well so I was a complex case. Andy took his time to professionally and accurately layout my case and assist me with finding a resolution. I researched a lot of tax advisers before making my decision and I am glad I did and relieved that I chose Andy and FWJ.
Chris Kitchen
