What should you do if you realise you have not disclosed all your income or gains to HMRC?

What should you do if you realise you have not disclosed all your income or gains to HMRC? If you become aware that you have undisclosed income or gains, then you have two choices: ignore the problem and hope it goes away OR contact HMRC as soon as possible and let them know.

Option 1 – ignore the problem and hope it goes away

This is not an option if you want to avoid tax penalties, or even legal action, because sooner or later, HMRC will be in touch about undisclosed income and/or gains. If HMRC contact you before you contact them, it will be considered a prompted disclosure which will result in higher penalties.

Option 2 – notify HMRC as soon as you realise you have undisclosed income

Once you realise that you have undisclosed income, you should notify HMRC as soon as possible so that you can prevent any further or higher penalties. Once you have notified HMRC, you will have 90 days within which to organise your paperwork, calculate what you owe and pay the outstanding tax. 

If your undisclosed income or gains falls within one of the categories listed below, then you will be able to notify HMRC using their digital disclosure service. 

• Income Tax
• Capital Gains Tax
• Inheritance Tax
• Corporation Tax
• National Insurance contributions
• Annual Tax for Enveloped Dwellings (ATED)

To notify HMRC of undisclosed income using the digital disclosure service you will need to: 

1. Go to HMRC’s digital disclosure service and follow the prompts. 
2. Wait for HMRC to acknowledge your notification with a notification acknowledgement letter which will include:
   1. your disclosure reference number - you can only make payment once you have this number. 
   2. A request to make payment within 90 days.

What about overseas assets, income or gains?

If undisclosed income is related to income, assets or gains outside of the UK, then you can notify HMRC using the worldwide disclosure facility, which is part of the digital disclosure service.

If undisclosed income or gains is different from the categories above

If your undisclosed income or gains does not fall within the categories listed above, or if it is related to VAT errors, then you will need to follow a different procedure to notify HMRC. We recommend that you check the Government website or contact us as soon as possible so that we can advise you where and how to notify HMRC. 

How we can help you

We, at LSR, can assist you with any disclosures that you need to make. Once we have discussed your situation with you, we can:

• Advise you as to whether you have failed to disclose income and/or gains or not
• Advise you of the correct avenue to notify HMRC
• Advise you on how to make the disclosure, including what information you will need to provide, how much you will need to pay and how to pay HMRC
• Make the disclosure on your behalf

As undisclosed income and/or gains can lead to high penalties and, in the worse cases, legal action, we recommend that you get in touch with us as soon as possible if you have any questions or concerns about your tax declarations. We can help to clarify your tax obligations and advise you how best to declare and pay any outstanding tax.

Contact LSR Partners today to speak with our expert team and pay the right tax, in the right place, at the right time.