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I’ve come clean to the Inland Revenue, but what now?

Question I have not submitted an Inland Revenue tax return for myself but ahead of any letter/ enquiry from them I have written to them saying I would like to correct my mistake as I now realise I should have submitted returns for last 3 years. The tax office has simply asked me to submit my returns within the next three months.

Because I have asked for the forms myself will there be a penalty or a surcharge?  If so how much are these likely to be – fixed amounts or percentages?

Ian says

There are two issues here, dependent on how the Revenue handles the case.  The first way of treating this is as a voluntary declaration case, in which case the taxpayer is making a voluntary declaration and there will only be interest charged on the late payment of tax from the due dates.  If the taxpayer has previously submitted no Tax Returns at all, then they are making a full voluntary declaration.  If they have previously submitted Tax Returns, then they are correcting their mistakes within those Returns, and have made false declarations on previous Returns.  This is not critical if the taxpayer makes the declaration before any enquiry is opened.

Generally an enquiry will be opened on receipt of the Returns and the Revenue will seek to examine the entries on at least one of the Returns to ensure that they are correct.  Should they find errors and additional tax become due, then they will charge interest on the late paid tax and may well impose a penalty (which can be up to 100% of the tax charged) as well.  Any penalty addition is likely to be in the 10-20% range.

Professional advice should always be sought before making the declaration and during the ensuing enquiry in order to minimise the tax liability.
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