HMRC have recently been gathering information using the Automatic Exchange of Information agreements which are in place between the UK and other countries. These agreements allow the exchange of information between tax authorities of different countries to help stop tax avoidance and evasion. The information includes details about financial accounts and investments and details of the account holders.
Overseas financial institutions, for example, banks, building societies, insurance companies or investment companies, will provide information on UK residents with financial accounts and investments to their own Tax Authorities who share this with HMRC.
HMRC collects the same information on non-UK residents with accounts and investments in the UK and shares this with the relevant countries.
If you are in a position of having undeclared income or investments held abroad then our advice would be to speak to us at Hanley and Co. to make sure that you get the right advice before HMRC contact you.
Tax Enquiries
If HMRC launches a tax enquiry into your affairs, professional advice is essential. Without advice an enquiry can drag on for years and settlements, interest and penalties can escalate.
There are different types of tax enquiry:
- an aspect enquiry (where HMRC only look at one or some ‘aspects’ of your tax affairs)
- a complex enquiry which looks at the full tax return.
Hanley & Co Accountants are highly experienced in advising clients in all types of tax enquiry.
We have a great track record for concluding enquiries quickly with minimum settlements and minimum stress to our clients.
In some cases, for example with an aspect enquiry we have been able to ‘nip it in the bud’ and get it concluded within a few days.
In full enquiry cases, HMRC will request detailed records. We can collate all of this for you and deal with any queries arising to minimise your stress and time.
Our success is down to two factors – firstly we take a pro-active approach, and secondly, we have 30+ years of experience in this area.
Why We Do Not Offer Tax Enquiry Insurance
Many accountancy practices offer ‘tax enquiry insurance’ as standard to all clients.
So each client pays say £10-20 per month for the insurance, which should cover additional accountancy fees that would be incurred if a tax enquiry arises.
At Hanley & Co, we choose to not offer this insurance to any of our clients because:
- The accounts and tax returns we prepare are very high quality and transparent which minimises the risk of an enquiry in the first place
- We recognise the chances are most clients will never get an enquiry from HMRC throughout the lifetime of their business, or of their personal tax obligations. This means paying £10-20 per month throughout that whole period, for most clients, is likely to be a waste of money!
- Our average fee for resolving a full enquiry might be is £800 to £1,500 plus VAT. So if the ‘worst’ does happen and enquiry is made it is almost always far cheaper, in our experience, to pay the one-off accountancy fees when they arise rather than constantly insuring against them
Tip – If you are still anxious about the threat of an enquiry, you could always save the £20 per month into your own savings account (earning interest on it) to give you some peace of mind - Tip 2 – Our Institute requires that we tell you these policies are available so if you want one please ask and we will suggest a few options
- The fee for dealing with an aspect enquiry (and these are far more common) might be £500 plus VAT
- Going through the insurance process can often delay giving a prompt response to HMRC The insurers would dictate the strategy for dealing with HMRC and prescribe a maximum number of hours we can spend on it. Both of these constraints would, we feel, restrict our ability to get a good result for you.
At Hanley & Co, because we are unhindered by insurance policies we can promptly provide an estimate of our time (and fees), and then jump straight on the work and resolve the enquiry for you promptly. We prefer to invoice our fees at every stage of the enquiry so you know the latest progress and costs.
Tax Disclosures
HMRC encourage those who have not paid the correct amount of tax to be proactive and make a ‘voluntary disclosure’ to them. This process is roughly:
- notifying HMRC of the intention to make a disclosure
- quantifying the undeclared income or gains
- calculating the tax on that
- declaring the liability and the interests and penalties on that tax liability
- negotiating with HMRC
- concluding the disclosure
It is worth noting a voluntary disclosure will result in much more favourable treatment from HMRC concerning the payment arrangements, and penalties, than if HMRC raises the issue themselves first (which is called a prompted disclosure).
HMRC accept disclosures online using their Digital Disclosure Service which we can access easily on your behalf. Examples of disclosures include:-
- Worldwide Disclosure Facility for declaring tax on previously undeclared foreign income such as bank interest, other investment income, or foreign employment income
- Let Property Disclosure Facility for declaring tax on previously undeclared rental property income.
At Hanley & Co we have extensive experience with preparing, submitting and concluding disclosures quickly and minimising penalties. Our approach is pro-active and non-judgemental.
Our fees are based on an hourly rate for the time we spend on the disclosure and we will gladly provide an estimate of the fees involved before starting work.
So if you think you have any income or gains which should have been disclosed to HMRC, please do not hesitate to contact us as we will be able to help you resolve this and give you peace of mind.