Whether your employment status is being a self-employed individual or you are a business owner, the management of taxes is always a complicated process for everyone. The expectation of occasional mistakes that occur unintentionally also requires your attention. Sometimes, people tend to declare their income to HMRC but the mistakes are found after a long time. However, there is a high chance that you can rectify your mistakes. The recent mistake that you have just realised while declaring your income to HMRC, opt for voluntary disclosure. Now, what is voluntary disclosure?
It is a kind of activity that keeps you penalty free and safe even if you have made some unintentional mistakes. Now you aim to keep your finances straight to grow your business and stop worrying about mistakes. Here is the need to know certain facts. This guide will help you to understand everything related to this procedure. This involves the understanding of what is voluntary disclosure, what comes under it, when is voluntary disclosure required and what is its importance.
Reach out to one of our professionals to get to know what is the best way to handle the queries about what is voluntary disclosure for your earnings in the UK.
What is Voluntary Disclosure?
You are liable to submit the multiple income streams that are helping you to make money in every way possible to HMRC. You will have to declare your income as it is and keep the factor of transparency alive with the process. HMRC ensure that the customers get the accurate amount written in the tax bills and there are no errors in the payments of tax bills. However, there are still cases of errors to be occurred in the tax bills or in the information provided by the customers which make the process complicated. This results in businesses and individuals paying less amount than what they actually owe to HMRC.
Here comes the role of voluntary disclosure which helps to reduce the chances of errors on the tax bills. Even the previous mistakes in the tax payments can be rectified with the help of correct declaration. The payments can then be updated. This service is known by the name of digital disclosure service and is very helpful in this regard. Your discrepancies related to the income tax, corporation tax, national insurance or any other tax that you owe can be rectified easily with this. Once you sort out the matter, you will have a period of 90 days to clear the tax payment.
What Comes Under Voluntary Disclosure?
This voluntary disclosure can be used when a business or an individual wants to do a disclosure about any of the following:
Moreover, if you feel like you were not in a position to declare all of your income to HMRC as a business, you can immediately opt for voluntary disclosure to inform HMRC.
When is Voluntary Disclosure Required?
It is required for all kinds of organisations, businesses, companies, and individuals to declare their income streams and the exact income so that HMRC is ensured that everyone is paying the accurate amount of tax. Current legislation is considered to check the level of accuracy in this regard. If you realise that is an error in submitting your tax returns or any other procedure, you can choose voluntary disclosure to get in touch with HMRC to inform them about the mistake.
What Makes Voluntary Disclosure So Important?
If you deliberately plan to hide some of the information about your income or provide false documentation to prove a figure that is not correct, you’re in trouble. HMRC will find it out later in the process. So if you are expecting that you can do it and HMRC wouldn’t know, this is a serious mistake that can result in putting you in some serious consequences. You will have to pay a huge amount in penalties and even go to prison for several years.
However, if you choose to opt the voluntary disclosure, HMRC will become lenient with your case and mistakes. But if the mistakes are figured out in doubt and then from the process of investigation, you will not be spared and the consequences will be more severe than you expect.
The Bottom Line
Now that you have gathered a fair amount of information about what is voluntary disclosure, we can bring the discussion towards wrapping up. A voluntary disclosure to HMRC is important when you have realised a mistake in your tax returns as this allows you to get lenient treatment from HMRC and you can rectify your mistakes as well. This will help you and HMRC to pay the accurate tax bill. We hope these few minutes of reading have helped to develop a better understanding of what is voluntary disclosure and relevant facts. This will help you in future to handle your tax affairs efficiently.
Get in touch with our young, clever, and tech-driven professionals if you want to choose the best guide for what is voluntary disclosure in the UK for your income.
Disclaimer: The information about what is voluntary disclosure provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.