Something to declare? A potted guide to voluntary disclosures

What if you conclude that your past tax returns have understated your taxable income or gains?  What should you do and how should you do it?

“Keep schtum” might be the first thought that springs to mind.  Like many first thoughts, though, it’s a profoundly bad idea.  Even where a return has initially been made in good faith and an honest error is subsequently identified, a failure to correct the honest error promptly is itself treated and penalised as dishonesty.

Where an understatement for a tax year is discovered within 22 months of the end of the year, it is possible simply to amend the tax return concerned.  Interest will automatically be charged on any tax paid late: penalties may or may not be chargeable depending on the circumstances.

In other circumstances, it will be necessary to use one of HMRC’s “disclosure facilities”.  Increasingly, HMRC is driving down costs (its costs, obviously) by encouraging online disclosure.

Domestic disclosure facilities

HMRC has developed a “carrot and stick” approach to disclosure.  It will first target an industry sector by offering for a limited period an opportunity for “coming clean” on favourable terms.  Then, after the disclosure opportunity has closed, it will aggressively target the sector with increased investigation activity in the sector.  So far, businesses as varied as solicitors, plumbers, doctors and electricians have benefitted (if that is the right word) from this approach.

As at June 2017, three domestic disclosure campaigns are open. They are styled the Let Property Campaign, the Second Incomes Campaign and the Credit Card Sales Campaign (also known as the Card Transaction Programme).  No end dates have yet been set for utilising these facilities.

For disclosures which are not appropriate to a current sector campaign, use of HMRC’s Digital Disclosure Service (DDS) is encouraged. It starts with registration of an intent to disclose; you then have 90 days to work out the tax, interest and penalties due, and pay HMRC.  It’s possible to provide some narrative with the online disclosure figures, but this is extremely limited.  In particular there may be little scope for explanation of points of doubt or difficulty.


Tax is not sufficiently joined-up for HMRC’s Digital Disclosure Service to encompass VAT irregularities.  Some VAT errors can be adjusted on your next VAT return.  Others must be separately notified on a special form.

Offshore matters

In September 2016, HMRC initiated a Worldwide Disclosure Facility (WDF) aimed at individuals with unpaid taxes connected to overseas assets.  This replaced the Liechtenstein Disclosure Facility which closed on 31 December 2015.

WDF is intended to provide a last opportunity to individuals who have unpaid taxes connected with offshore assets to come forward, prior to information being shared under the Common Reporting Standard (CRS) and tougher legislation coming into force on 30 September 2018.

Deliberate omissions

The final available disclosure facility is known as the Contractual Disclosure Facility (CDF).  This will most commonly be offered by HMRC as part of an enquiry where tax fraud is suspected (a so-called COP9 enquiry).  A disclosure under the CDF will normally be a substantial and detailed document which is seldom (if ever) completed without the advice of a tax adviser specialising in the area.

However, the CDF is not limited to disclosures prompted by an HMRC enquiry – it may also be used for voluntary disclosures.  You might wonder why anyone would opt for the costlier and more complex CDF over the simpler DDS.  The answer is that CDF (unlike DDS) offers a guarantee of immunity from prosecution.

So if omissions from tax returns are deliberate, substantial and have gone on over a lengthy period (or involve businesses where HMRC would be especially inclined to prosecute for tax fraud such as accountants, tax advisers and the like), CDF should certainly be considered, weighing up the additional cost and complexity against the risk of criminal proceedings.

Advantages in coming forward  

There are a number of advantages in making a voluntary disclosure.  They range from peace of mind and being able to sleep at night through to reducing the amount that will have to be paid, having some control of the process and in the most serious of cases, securing immunity from a criminal investigation.

Disclosure options: which to choose?

In creating an online facility, HMRC has sought to establish a straightforward way for individuals to disclose unpaid taxes. But except in the simplest cases, there may be questions as to exactly what needs to be disclosed or how the disclosure is best made.

For assistance with disclosures of any kind, from correcting the omission of a few pounds of bank interest to telling HMRC of a whole new business activity, please do not hesitate to us.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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