Guidance

Solicitors' Tax campaign: your guide to making a disclosure

Published 8 December 2014

This guidance was withdrawn on 10 June 2015

Solicitors Tax Campaign disclosure opportunity ended on 9 June 2015. For further information see HM Revenue and Customs Campaigns.

Solicitors Tax Campaign disclosure opportunity ended on 9 June 2015. For further information see HM Revenue and Customs Campaigns.

1. About the Solicitors’ Tax Campaign

1.1 Introduction

The Solicitors’ Tax Campaign voluntary disclosure opportunity runs from 8 December 2014 to 9 June 2015. It will be of interest to you if you work within the legal profession as a solicitor and you want to bring your tax affairs up to date. For example if you haven’t told HM Revenue and Customs (HMRC) about all your past income, gains and undisclosed liabilities.

You may be a solicitor working:

• for yourself in your own business
• within a partnership or limited liability partnership
• within or as a company

This list is not exhaustive.

HMRC believes that its customers want to pay the right amount of tax and wants to help those not paying the correct amount of tax to put that right. This guidance describes what to do if you need to put things right.

If you have nothing to disclose and pay to HMRC you don’t need to use the Solicitors’ Tax Campaign.

HMRC will use information it holds on its digital intelligence systems to identify people who have failed to pay the right amount of tax.

If you’ve undisclosed income and you haven’t paid the right amount of tax you now have the opportunity to notify, disclose and pay what you owe through the Solicitors’ Tax Campaign.

1.2 The scope of the Solicitors’ Tax Campaign

The Solicitors’ Tax Campaign is an opportunity open to those working within the legal profession as a solicitor with undisclosed taxes and duties.

If you wish to make a disclosure but you don’t work as a solicitor please refer to ‘Disclosures outside of the Solicitors’ Tax Campaign’ section of this guide.

1.3 How the Solicitors’ Tax Campaign works

If you work within the legal profession as a solicitor, you can benefit from the terms offered. Through notifying your intention to disclose by 9 March 2015 and making your disclosure and payment by 9 June 2015 you will have the following guarantees:

• you can tell HMRC how much penalty you believe you should pay, what you pay depends on why you have failed to disclose your income, if you’ve deliberately kept information from HMRC you should pay a higher penalty than if you’ve simply made a mistake
• if you can’t afford to pay what you owe in one lump sum, don’t worry, if your circumstances warrant it, you’ll be able to spread your payments
• if you’ve simply made a careless mistake you only pay for a maximum of 6 years - no matter how many years you’re behind with your tax affairs, however if you don’t come forward and HMRC finds later that you’re behind with your tax, it may be harder to convince HMRC that it was simply a mistake, the law allows HMRC to go back up to 20 years in serious cases or HMRC may carry out a criminal investigation

You may not have to pay any penalty at all but if you do it’s likely to be lower than it would be if HMRC finds out you haven’t paid enough tax.

Under the Solicitors’ Tax Campaign you can make a disclosure:

• about your own tax affairs
• on behalf of someone else (for example, if you’re a personal representative of a deceased person)
• on behalf of a company (if you’re a company director or company secretary)

Agents can notify and disclose on behalf of their clients.

There are 2 stages to the Solicitors’ Tax Campaign. You must notify HMRC by 9 March 2015 of your intention to make a disclosure and then make your disclosure, and full payment, by 9 June 2015

By doing so, you’ll qualify for the terms of the Solicitors’ Tax Campaign. If you don’t notify HMRC by that date the Campaign’s terms won’t be available to you.

The disclosure forms and payment must reach HMRC by 9 June 2015.

If you have a disclosure to make but miss the deadline of 9 June 2015 you can still make a disclosure but this could affect the amount of penalty payable. Coming forward voluntarily will still help reduce any penalty you’re charged so please send your disclosure to the address shown under the ‘Disclosures outside of the Solicitors’ Tax Campaign’ section of this guide.

1.4 What’s in it for me?

It’s always better to come to HMRC and obtain the best possible terms before HMRC comes to you.

This is an opportunity to stop worrying about what might happen, have certainty about what you owe and get things right for the future.

1.5 If I disclose this liability could HMRC publish details about me?

You’ll earn the maximum reduction of any relevant penalties for the quality of disclosure, and HMRC won’t publish your details if you do all of the following:

• notify HMRC that you’re going to make a disclosure
• make a full disclosure including full payment of tax owed which proves to be both accurate and complete before the deadline for doing so
• co-operate fully with HMRC if they ask you for any further information

HMRC may include you in a published list of deliberate defaulters if you don’t follow these steps.

1.6 To take part in the Solicitors’ Tax Campaign you should:

• tell HMRC that you want to take part (Notify)
• tell HMRC about all income, gains, tax and duties you’ve not previously told them about (Disclose)
• make a formal offer
• pay what you owe by 9 June 2015
• help HMRC as much as you can if they ask you for more information - if you don’t, HMRC may not accept your disclosure

These terms won’t be available if you choose not to sign up for the Solicitors’ Tax Campaign and HMRC later finds that you’re behind with your tax affairs.

1.7 Disclosures that are unlikely to be accepted through the Solicitors’ Tax Campaign

Certain disclosures are unlikely to be accepted under the Solicitors’ Tax Campaign:

• disclosures that are found to be materially incorrect or incomplete when checked by HMRC
• disclosures from customers where HMRC has notified their intention to open an enquiry or compliance check before the Solicitors’ Tax Campaign opportunity opened on 8 December 2014 - those who want to disclose liabilities should tell the person conducting the enquiry as a full and early disclosure will influence the amount of penalty HMRC seeks in the ongoing enquiry or investigation
• disclosures where HMRC believes the money that is the subject of the disclosure is the proceeds of serious organised crime for example VAT fraud, VAT bogus registration fraud, organised tax credit fraud and instances where there is wider criminality (such as an ongoing police investigation)

An important factor for HMRC in deciding if they will carry out civil or criminal investigations into cases of fiscal fraud is whether the taxpayer(s) has made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed. Whilst HMRC would consider each case on its merits a complete and unprompted disclosure would generally suggest that a civil (rather than criminal) investigation was appropriate.

Also, if you were eligible for any previous HMRC disclosure opportunity but didn’t come forward at that time, HMRC may find it hard to accept that anything you disclose through the Solicitors’ Tax Campaign was not a result of something you did deliberately. HMRC would expect you to calculate your penalty and the number of years you should pay to reflect deliberate action. If you don’t, HMRC may not accept your disclosure. You’ll be in this category if you haven’t yet come forward and would have been covered by a past campaign.

1.8 Disclosures outside of the Solicitors’ Tax Campaign

You can still make a disclosure and put your tax affairs in order even if you’re not within the scope of the Solicitors’ Tax Campaign. Your disclosure won’t be part of this opportunity and the terms and penalties offered under the Solicitors’ Tax Campaign won’t be available.

If you make a full and voluntary disclosure of all unpaid liabilities in these circumstances you can expect a lower penalty than HMRC would otherwise seek if they raised an enquiry or compliance check without the disclosure.

You should telephone the Campaigns Voluntary Disclosure Helpline on Telephone: 0300 123 1077. This is a helpline specifically designed to help you if you don’t fall within the scope of an ongoing campaign but wish to make a voluntary disclosure.

1.9 If you disclose very serious tax problems

HMRC can’t offer immunity from prosecution but an important factor when they’re deciding whether to carry out criminal investigations into cases of tax fraud is whether you’ve made a complete and unprompted disclosure of any amounts evaded or improperly reclaimed.

In serious cases HMRC may consider the instigation of a criminal investigation, in line with their criminal investigation policy.

1.10 If you leave something important out of your disclosure

If after submitting your disclosure you realise you’ve missed out something, you have until the end of the disclosure period 9 June 2015 to make an amendment. You can do this by contacting the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749 or forwarding your amendment in writing to the following address:

HMRC Local Compliance Centres
HMRC Revenue and Customs
Local Compliance Centres
Solicitors’ Tax Campaign Team S1250
PO Box 3900
Glasgow
G70 6AA

If, after 9 June 2015 HMRC receives information indicating that your disclosure was incorrect, they have the right to look at your tax affairs again.

HMRC may write to you about the information they’ve received and if necessary, will send you assessments to collect any extra tax due. Interest and penalties will also be charged. Any penalties are likely to be higher than those offered by the Solicitors’ Tax Campaign and HMRC may charge penalties on all the tax - including the tax previously dealt with under the Solicitors’ Tax Campaign. In serious cases HMRC may consider criminal prosecution and in such cases your disclosure could be used in evidence.

1.11 If you’ve undisclosed liabilities and choose not to disclose

Once the notification period ends HMRC will review the tax affairs of those customers who haven’t come forward. HMRC will identify those who they believe should have come forward by:

• comparing the information already in their possession with customers’ UK tax histories
• continuing to use their powers to obtain further information about other payments made

HMRC may contact customers and carry out compliance checks or enquiries to resolve matters. Where additional taxes are due HMRC will usually charge higher penalties than those available under the Solicitors’ Tax Campaign. The penalties could be up to 100% of the unpaid liabilities.

If a disclosure made within the terms of this disclosure opportunity is incomplete or there’s a failure to disclose amounts liable to tax or duty, HMRC may consider the instigation of a criminal investigation, in line with their criminal investigation policy.

2. How to make a notification and disclosure to HMRC

2.1 What do I need to do?

There are 2 stages to the Solicitors’ Tax Campaign. Each stage has its own time limit.

Stage 1 - Notification

You must tell HMRC of your intention to make a disclosure. You need to do this by 9 March 2015.

At this stage, you only need to tell HMRC that you’ll be making a disclosure.

You don’t need to provide any details of the undisclosed income or the tax you believe you owe.

You can tell HMRC about a disclosure you’ll be making:

• about your own tax affairs
• on behalf of someone else (if you’re a tax adviser, trustee, or the personal representative of a deceased person)
• on behalf of your company (if you’re a director or company secretary)

You can’t include details for more than 1 person and or company on a disclosure. For example if a husband and wife both have undisclosed income they must complete separate disclosures, each showing the share of the income they need to disclose. A separate notification is required for each person. Similarly if a disclosure is required for a company and for a director, this should be on 2 separate disclosures.

You can notify:

• online by completing form DO1 Notification
• by phone to the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749

HMRC will note your details if you telephone, or if you notify online they will send an electronic acknowledgment providing you give consent for HMRC to contact you by email. Your form will be sent over an internet channel which doesn’t have security protection. Information you send is at your own risk.

Later HMRC will write to you to confirm your unique Disclosure Reference Number to use whenever you contact them about the Solicitors’ Tax Campaign.

You will also be given a Payment Reference Number to use when paying what you owe. If you would like HMRC to send you a payslip, please phone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

If you haven’t notified HMRC by 9 March 2015, you may not be able to make a disclosure under the Solicitors’ Tax Campaign. This means that you may not receive the terms available.

Stage 2 - Disclosure

You can do this as soon as you have your Disclosure Reference Number or at any time before 9 June 2015.

You can make a disclosure:

• about your own tax affairs
• on behalf of someone else (if you’re a tax adviser, trustee or personal representative of a deceased person)
• on behalf of your company (if you’re a director or company secretary)

You can make your disclosure by:

• completing and submitting form DO2 Disclosure
• printing and posting the completed form

You should post the completed disclosure form to:

HMRC Local Compliance Centres
HMRC Revenue and Customs
Local Compliance Centres
Solicitors’ Tax Campaign S1250
PO Box 3900
Glasgow
G70 6AA

Please quote your Disclosure Reference Number.

When you send your disclosure you must pay what you owe.

If you need help making your disclosure you can ask a tax adviser or you can phone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749. Lines are open Monday to Friday, 8am to 8pm.

Please make sure that HMRC receives your disclosure and payment by 9 June 2015. If you can’t pay what you owe by 9 June 2015 you must have made payment arrangements with HMRC by that date (more details can be found in the ‘What to do if you can’t pay the full amount’ section).

If you don’t do this you won’t be able to make a disclosure under the Solicitors’ Tax Campaign and won’t receive the certainty of terms and conditions within it.

3. Preparing your disclosure

3.1 How to calculate what you owe

Depending on your circumstances this could be simple or complicated and you may want to seek independent professional advice. Although you have until 9 June 2015 to make your disclosure HMRC recommends that you start gathering together your information and records as early as possible.

HMRC can’t provide individual advice on calculating how much you should pay.

For Income Tax, you’ll need to work out the total income for each year you have previously failed to tell HMRC about. You don’t need to include any income in your disclosure that you’ve already declared. This is because tax should already have been paid on this income.

Then, you’ll need to deduct the allowable expenses from your total income in order to determine your taxable profit (income). Not all of the expenses you incur will be allowable as a deduction. You shouldn’t include any expenses in your disclosure that you’ve previously included in a tax return or earlier correction.

Once you’ve calculated the income you need to disclose, you’ll need to work out how much tax you owe on that income. The rates of Income Tax you’ll pay depend on how much income you earn above your Personal Allowance, which is an annual amount of tax-free income.

If you’ve already received PAYE income and/or told HMRC about some other income and are now disclosing additional income for any year you need to make sure that you take this into account in your calculations.

If you or your partner are receiving or have recently made a claim for tax credits you should still make a disclosure but tick the appropriate box on your disclosure form. The information will be passed to the tax credit office to consider. You’ll be notified separately of any changes that may be required to the amount of tax credits you receive for the relevant years. If you’ve made a joint claim for tax credits you may need to tell your partner that the award may be adjusted as a result of your disclosure.

Companies (and other organisations including clubs, societies, associations and other unincorporated bodies) will need to determine the amount of Corporation Tax to disclose on the understated profit arising from this undeclared income. The rate of Corporation Tax payable will depend on circumstances. You’ll have to consider notifying Companies House if you’ve submitted accounts that require amendment.

More information is available about tax rates, rate bands and thresholds. All calculations must be in pounds sterling using the appropriate exchange rates.

If you’re taking part in the Solicitors’ Tax Campaign you’ll know why you haven’t previously told HMRC about your income or paid the right amount of tax. HMRC asks you to decide whether you made an error despite taking reasonable care, whether you were careless, or whether it was something you did deliberately. How much you pay will depend on the answers to those questions.

3.2 Years covered by the Solicitors’ Tax Campaign

The Solicitors’ Tax Campaign is the opportunity to put your tax affairs in order up to 5 April 2013.

3.3 What years do you have to pay?

This depends on why things went wrong.

If you’re disclosing as, or on behalf of, an individual

If you’ve taken reasonable care to make sure your tax affairs were correct but you have still paid too little, you’ll only have to pay HMRC what you owe for a maximum of 4 years. This means you have to:

• complete the disclosure form and pay HMRC what you owe for the 3 years up to 5 April 2013
• make sure that your tax affairs are correctly reflected on your tax return for the year ending 5 April 2014

If you’ve already submitted the return for the year ending 5 April 2014 you can make an amendment within 12 months of the statutory filing date.

If you’ve been issued with tax returns for years ending 5 April 2011, 5 April 2012 or 5 April 2013 and haven’t completed them you should do so before 31 December 2014. You shouldn’t include these years in your disclosure.

If you’ve paid too little because you were careless, you’ll have to pay HMRC what you owe for a maximum of 6 years. This means you have to:

• complete the disclosure form and pay HMRC what you owe for the years up to 5 April 2013
• make sure that your tax affairs are correctly reflected on your tax return for the year ending 5 April 2014

If you’ve already submitted the return for the year ending 5 April 2014 you can make an amendment within 12 months of the statutory filing date.

If you’ve been issued with tax returns for year ending 5 April 2011, 5 April 2012 or 5 April 2013 and have not completed them you should do so before 31 December 2014. You shouldn’t include these years in your disclosure.

If you’re disclosing on behalf of a company

A company’s tax returns should be submitted within 12 months from the accounting period end date. There are various deadlines and requirements for Corporation Tax.

If your company tax returns are outstanding, you should file all outstanding tax returns that are within 4 years from the end of the accounting period. Income for earlier years can be included in your disclosure.

For example, if your company has come to within the charge to Corporation Tax and if today’s date is 12 November 2014 and your Corporation Tax accounting period ends on the 31 March 2015, you must pay the Corporation Tax for that period by 1 January 2016 and file your company tax return for that period by 31 March 2016. The profits chargeable to Corporation Tax for the accounting period ended 31 March 2014 should be submitted on a tax return online no later than 31 March 2015. The profits chargeable to Corporation Tax for both years shouldn’t be included in the disclosure.

Companies can refer to Corporation Tax rates and HMRC interest rates to establish the amount of tax and interest payable. Penalties can be calculated by reference to the tax understated and applying the appropriate penalty percentage as shown in Appendix A.

If you’re not yet registered

For Self Assessment you will need to register now either for Income Tax, or in the case of companies, you must give notice of coming within charge of Corporation Tax.

If you’ve deliberately paid too little tax, for any year ended before 5 April 2009, you may need to go back to 1994 and 1995 and pay up to 20 years.

HMRC expects most people to have to pay a maximum of 6 years but there will be some who need to pay more. These are people who have been in business since before 6 April 2008 and have either:

• deliberately told HMRC they have earned less than they have
• not told HMRC anything at all about their income

If you failed to notify HMRC that you had started in business

When you started to receive income, and you’re an individual (including individuals within a partnership), the latest you should tell HMRC is 5 October after the end of the tax year for which you start to receive that income. If, for example, you have tax to pay on income in the tax year ended 5 April 2014, you need to let HMRC know by 5 October 2014.

HMRC sends a newly formed limited company form CT41G (Corporation Tax - Information for New Companies) within a few days of the company being registered at Companies House. This form is usually sent by post to your company’s registered office. However, even if you don’t receive this form you must still tell HMRC within 3 months of your company becoming active, for example by starting business activity or starting to trade. The best way to do this is to use HMRC’s online service.

If you failed to register for a Self Assessment tax return by the appropriate deadline you’ll have to pay HMRC what you owe up to a maximum of 20 years.

3.4 If you don’t have all the business records you need to make your disclosure

Please call the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749 to advise HMRC.

If your records are incomplete you should make your best estimate of the undisclosed income and gains and use this to make your disclosure. HMRC may ask you to explain how you’ve worked out any estimates you have used, so you need to keep your calculations.

If you have your bank statements for the period of your disclosure they will probably help. If you don’t have them, HMRC recommends that you contact your bank as soon as possible to ask for copies.

If you can’t get copy statements at all, you should work out your income by using more recent statements as a guide to your income and expenditure. HMRC may ask you to explain why you couldn’t get copy statements.

If you’ve not kept proper business records and records for Corporation Tax you should begin to do so immediately. This opportunity is your chance to put things right from now on. If HMRC finds in the future that you’ve failed to keep appropriate records, they can penalise you up to £3,000.

You can also ask your tax adviser if you need help, or phone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

3.5 If you use estimated figures in your disclosure and it’s found to be materially incorrect or incomplete

If HMRC decides that your disclosure was incorrect or incomplete, they will notify you it has been rejected and inform you how they intend to proceed. You’ll have to pay the extra tax and interest. HMRC may also charge you a higher penalty than the one you included in your disclosure.

If HMRC decides that you have acted dishonestly in making your disclosure, they’ll consider carrying out a criminal investigation.

3.6 Tax and Class 4 National Insurance contributions relating to your income

You need to include separately in your disclosure the tax and Class 4 National Insurance contributions due on your income. There are 2 calculators that may help you to work out these figures. These are:

• calculator for Income Tax, Class 4 National Insurance contributions, interest and penalties for the tax years 2007 to 2008 up to 2012 to 2013
• interest and penalty calculator for the tax years 1994 to 1995 up to 2012 to 2013

These calculators should only be used for helping you to complete your disclosure under the Solicitors’ Tax Campaign. They musn’t be used for any other purpose.

The amount of National Insurance contributions that you pay to HMRC is routinely notified to the Department for Work and Pensions. However if you’re concerned that the earnings you’re now declaring could impact on any means tested benefits such as housing benefit or Council Tax benefit you receive, you should contact your local authority to discuss this.

3.7 Other income liabilities including non-business income

You need to include any other untaxed income in your disclosure as well as the income you receive from your work as a solicitor. This may include:

• earned income not taxed before you receive it, for example, profits from another business
• investment income not taxed before you receive it, for example, interest
• income from property or land rental etc (less the expenses relating to that income) however, if your only undeclared income is from residential letting you should use the Let Property Campaign to disclose this
• capital gains made on the disposal of investments, such as land, property, shares, stocks, bonds, goodwill

If you’re not sure whether you should have paid tax or National Insurance contributions there are several ways you can get more information or help. You can:

• read about taxable and non-taxable income
• telephone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749
• telephone the Taxes Helpline on Telephone: 0300 200 3300

Customers who need extra help are identified by our telephone helpline advisers and additional support, whether by phone or in person may be available. This service replaced HMRC’s network of enquiry centres, which closed on 30 June 2014.

3.8 Loans to directors - Corporation Tax Act 2010, Section 455

If you’re a company director and take money out of your company that’s not a salary or a dividend - over and above any money you’ve put in - you’re classed as having received the benefit of a directors loan. If this applies the company may have tax to pay.

When you pay off a director’s loan on which your company has paid Corporation Tax, your company may be able to reclaim that amount of Corporation Tax paid, you should contact the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

However, if you’re disclosing on behalf of a company that’s entitled to claim relief under Section 458 CTA 2010 call the Solicitors’ Tax Campaign on Helpline Telephone: 0300 013 4749 immediately for an appropriate offer letter.

3.9 Employer Tax and National Insurance contributions on wages for employees

If you employed anyone, and you’ve not deducted and/or paid the tax and National Insurance contributions in respect of their earnings this needs to be included on your form DO2 Disclosure.

3.10 VAT

You’ll need to consider whether you should have registered for VAT and charged VAT on goods or services that you’ve provided.

The current threshold for VAT registration, if you make taxable supplies, is £81,000. If your turnover of taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold or you expect it to go over that figure in the next 30 days alone, you must register for VAT.

If your turnover for any of the following years took you over the VAT registration threshold for that year, it’s possible that you should have been VAT registered before now. The requirement to register is based on a 12 month rolling period and needs to be reviewed monthly to see if you should have been registered or need to register now.

Don’t include the VAT amounts you owe in your disclosure through the Solicitors’ Tax Campaign. If you think you should have been registered or you’re registered and owe VAT, you should complete your disclosure to cover the other taxes and duties you owe and tick the appropriate VAT box on the disclosure form to tell us you will be resolving the VAT issues separately.

HMRC charges penalties for inaccuracies and certain VAT and Excise offences (known as ‘wrongdoings’).

3.11 Other liabilities you can tell us about in your disclosure

The following types of liabilities can’t be included in your disclosure:

• VAT
• Inheritance Tax
• Stamp Duty Land Tax

You can however use the ‘other liabilities’ section on the disclosure form to tell HMRC that you think you may need to resolve any issues for these types of income and your details will be passed on to the appropriate department within HMRC.

You can also indicate on the form if you or your partner have received tax credits in any of the years you have included in your disclosure as HMRC may need to review these payments

The disclosure form includes further guidance to help you decide whether you need to tell HMRC about these issues or not.

If you wish to make a disclosure of Inheritance Tax, trust or administration period liabilities please write to HMRC at:

HM Revenue and Customs
Trusts and Estates Risk Team
Ferrers House
PO Box 38
Castle Meadow Road
Nottingham
NG2 1BB

3.12 Class 2 National Insurance contributions

If you’re self-employed but have not yet registered to pay for Class 2 National Insurance contributions you need to do so immediately so you don’t lose out on future benefits.

Don’t include Class 2 National Insurance contributions in your disclosure through the Solicitors’ Tax Campaign. You can however, tell us in the ‘other liabilities’ section that you need to resolve any issues.

3.13 Interest

HMRC charges interest from the date tax/National Insurance contributions are due until the date they’re actually paid. Interest is calculated on a daily basis. If you fail to include the correct interest your disclosure will be rejected as it will be incomplete.

3.14 Penalties

HMRC charges penalties on any additional tax or National Insurance contributions due as a result of you having:

• sent HMRC an incorrect tax return
• not told HMRC that you’ve started to be liable to tax

HMRC doesn’t charge interest on these penalties unless they’re paid late.

The penalty is a percentage of the additional amount due. Normally, penalties can be up to 100% of the tax liability but for the Solicitors’ Tax Campaign the rates are usually 0%, 10%, or 20% depending on the circumstances.

There’s a penalty chart at Appendix A of this guide that will help you find which penalty percentage relates to your circumstances. Once you’ve found the percentage that relates to you, you should work out the amount of penalty you owe by multiplying the amount of total tax and National Insurance contributions due by the penalty percentage.

For example, if the total tax and National Insurance contributions due is £3,000 and your circumstances mean that you have to pay a 10% penalty, your penalty will be £300. The calculators can be used to work out your penalty. There’s a:

• calculator for Income Tax, Class 4 National Insurance contributions, interest and penalties for the tax years ending 5 April 2008 up to 5 April 2013
• interest and penalty calculator for the tax years ending 5 April 1995 up to 5 April 2013

The penalty chart is also incorporated into many of the help features on the disclosure form.

When HMRC checks your disclosure they will consider whether the penalty you’ve applied is reasonable. There’s a space on the disclosure form where you can provide an explanation.

HMRC expects to be able to accept most disclosures but if they think the penalty applied is inadequate then they may need to carry out a further check of your tax affairs. For example, HMRC may find it difficult to accept, without further enquiry, that someone in business for many years, earning significant amounts without telling HMRC, hasn’t done this deliberately.

Penalties that apply to offshore income and gains depend on the category into which the offshore territory falls. This includes your disclosure. Penalties that apply to offshore can be higher (up to 200%). Please contact the helpline on Telephone: 03000 0134 749 if your disclosure includes an offshore matter.

3.15 Total of all amounts due for the year

You need to add the interest and penalties to the total unpaid liabilities for the year to calculate this figure.

3.16 Total of what you need to pay for all years

To find out the total of what you need to pay, you’ll need to add together the total amounts due for each year included in your disclosure.

3.17 Declaration

This is a very important part of your disclosure. You should only complete the declaration once you’re certain that your disclosure is correct and complete and that you understand why you’ve been asked to include penalties in your disclosure.

3.18 Offer

It’s a condition of using the Solicitors’ Tax Campaign that you make an offer for the full amount of everything you owe. Your offer, together with HMRC’s acceptance letter to you will create a legally binding contract between you and HMRC. There’s a letter of offer included in the disclosure form which you should complete.

4. Paying HMRC

4.1 When will you have to pay

Unless you’ve contacted HMRC to agree additional time to pay, you should send your payment at the same time as you send your disclosure, but no later than 9 June 2015.

4.2 Payment methods

HMRC accepts payment by a range of methods but recommends that you make your payment electronically. Electronic payments are more efficient, secure and safer than payment by post. Whichever way you pay, please make sure that you quote your Payment Reference Number.

The different payment methods available are:

• direct debit
• debit or credit card
• through your own bank or building society by internet or telephone banking or CHAPS
• at your bank
• at the Post Office
• by post

4.3 If you can’t pay the full amount

HMRC expects you to pay what you owe when you make your disclosure.

If for some reason you can’t pay the full amount, you’ll need to let HMRC know as soon as possible and before you send in your disclosure. You should contact the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749. Lines are open Monday to Friday, 8am to 8pm.

When you phone, HMRC will want to talk to you about your current financial position so they can tell you what they think you should pay and when. To help HMRC decide, you’ll need to tell them:

• your Disclosure Reference Number
• how and when you intend to pay HMRC what you owe
• what your current weekly/monthly income and outgoings are
• what you own, including your home, other property/land, vehicles, investments, money in the bank etc
• what you owe, including mortgages, loans, credit cards

If you can’t pay the full amount, don’t submit your disclosure or payment until you have spoken to HMRC.

5. After HMRC receives your disclosure

5.1 Accepting your disclosure

HMRC anticipates that the vast majority of disclosures will be accepted. If after checks HMRC is satisfied that you’ve made a full disclosure, they will accept it as quickly as possible.

5.2 Acknowledging your disclosure

When they receive your disclosure, HMRC will send you an acknowledgment as soon as possible. HMRC will then consider the disclosure under the terms of the Solicitors’ Tax Campaign. If you haven’t received an acknowledgement within 2 weeks of sending your disclosure, please telephone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

HMRC expects most disclosures to be self explanatory but they may need to contact you or your tax adviser to clarify any points. You may also be asked to provide evidence of your circumstances to satisfy HMRC that your disclosure is complete. Your full co-operation is 1 of the conditions of using this opportunity and failure to co-operate may jeopardise acceptance of your offer.

5.3 Considering your disclosure

HMRC will review all disclosures and expect the vast majority of disclosures to be accepted and where this is the case they will send you a letter accepting your offer. If HMRC can’t accept the disclosure they will contact you. If following their enquiries HMRC finds that a disclosure is materially incorrect they’ll seek significantly higher penalties. It’s also possible that in exceptional circumstances an incomplete disclosure may be considered under the HMRC Criminal Investigation Policy. In such cases the material in the disclosure could be used as evidence.

5.4 Information received after disclosure accepted

HMRC will continue to seek new information. They will use it to identify customers where a disclosure should have been made or where the disclosure made isn’t what was expected based on the information HMRC holds.

6. Getting things right for the future

Once you have submitted your disclosure, HMRC expects you to keep your tax affairs in order in the future. This means that you should continue to accurately declare your income and gains for those years that fall after the latest tax year you include in your disclosure. You should ensure any tax returns that are issued to you are returned with accurate information by the appropriate deadlines.

6.1 Tax credits

If you or your partner are receiving or have recently made a claim for tax credits, you should still make a disclosure but also tick the appropriate box on your disclosure form. The information will be passed to the Tax Credit Office to consider. You’ll be notified separately of any changes that may be required to the amount of tax credits you receive or have received for the relevant year(s). If you’ve made a joint claim for tax credits you may need to tell your partner that the award may be adjusted as a result of your disclosure.

7. Other issues

HMRC recognises that some people have more complex tax affairs and may be affected by other issues. If you are still in doubt please ask your tax adviser or contact the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

8. General information

8.1 Help and advice

If you have any questions not covered by this guide please call the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749. Lines are open Monday to Friday, 8am to 8pm.

8.2 Customers with particular needs

If you need extra help to take part in the Solicitors’ Tax Campaign please get in touch. HMRC can help if:

• English isn’t your first language
• you want a copy of this guidance in Welsh
• you would like HMRC to use a certain format to communicate with you - for example braille or Text Relay
• you would like a copy of this guidance in audio or large print

Contact the helpline on Telephone: 0300 013 4749 or +44 300 013 4749 if dialling from outside the UK (Monday to Friday, 8am to 8pm).

If you use Text Relay by text-phone, please dial 18001 + number. If you use Text Relay by telephone please dial 18002 + number.

8.3 Your rights and obligations

HMRC’s Customer Charter (called Your charter) explains what you can expect from HMRC and what HMRC expects from you.

8.4 If you’re unhappy with HMRC’s service

If you’re unhappy with HMRC’s service please phone the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749 or write to HMRC at the address below:

HM Revenue and Customs
Local Compliance centres
Solicitors’ Tax Campaign team S1250
PO Box 3900
Glasgow
G70 6AA

8.5 HMRC’s commitment

HMRC’s service commitment is set out in ‘Your charter’.

8.6 Privacy and confidentiality policy

The full protection of the Human Rights Act will continue to apply to you and HMRC has a strict policy regarding the privacy and confidentiality of customers’ personal information.

8.7 Data Protection Act

HMRC is a Data Controller under the Data Protection Act 1998. HMRC holds information for the purposes specified in their notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

HMRC may get information about you from others, or they may give information to them. If HMRC does, it will only be as the law permits to:

• check the accuracy of information
• prevent or detect crime
• protect public funds

HMRC may check information they receive about you with what is already in their records. This can include information provided by you, as well as by others such as other government departments or agencies and overseas tax and customs authorities. HMRC won’t give information to anyone outside HMRC unless the law permits them to do so. HMRC’s Data Protection standards are set out in its Information Charter.

Appendix A: about the penalties that HMRC may charge in the Solicitors’ Tax Campaign

The tables below show the rate of penalty that HMRC might charge in a range of circumstances. You should find an example that you think best applies to your circumstances to see how much HMRC might charge you.

The tables show the penalty HMRC will charge if you:

• do take part in the Solicitors’ Tax Campaign
• don’t take part and they later find that you haven’t told them about all your income and paid enough tax

Although the rate of the penalties will vary depending upon your circumstances, they will usually be lower if you take part in the Solicitors’ Tax Campaign than they would be if you don’t.

If you haven’t declared the correct tax payable to HMRC despite taking reasonable care with your tax affairs, you won’t pay any penalties at all. HMRC doesn’t expect many people’s circumstances to fall within this category.

If you haven’t paid enough tax despite taking reasonable care with your affairs or there’s anything else you think HMRC needs to consider concerning the penalties you have to pay, please phone the helpline before making your disclosure.

If HMRC thinks that you haven’t included the right penalty in your disclosure, they may reject your disclosure.

The Solicitors’ Tax Campaign Helpline number is Telephone: 0300 013 4749.

Penalty if you come forward in this Solicitors’ Tax Campaign

Penalties for making an inaccurate return

Circumstance	Tax years up to year ending 5 April 2008 or accounting period ending on or before 31 March 2008	Tax years ending 5 April 2009 and later years or accounting period beginning on or after 1 April 2008
You sent HMRC a return showing less tax payable than the correct amount because you had been careless.	No penalty.	No penalty.
You sent HMRC a return knowing it showed less tax payable than the correct amount (you may have to pay penalties of up to 100% of the tax due if you tried to conceal the inaccuracy).	20% of the tax due.	20% of the tax due.

Penalties for failing to tell us about your liability to tax

Circumstance	Tax years up to year ending 5 April 2009 or accounting periods ending on or before 31 March 2010	Tax years ending 5 April 2010 and later years or accounting periods ending on or after 1 April 2010
You started trading, made a gain, started letting property, or received other untaxed income and didn’t tell HMRC that you needed to make a return, but you weren’t deliberately trying to keep the information from HMRC.	10% of the tax due.	10% of the tax due or 0% if you advise HMRC within 12 months from when the tax first became unpaid.
You deliberately failed to tell HMRC you had started trading, made a gain, started letting property, or received other untaxed income and needed to make a return. (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the failure.)	20% of the tax due.	20% of the tax due.

Penalty if HMRC finds out you haven’t paid enough tax

Please note higher penalties of up to 200% can be charged in relation to inaccuracies involving offshore matters.

Penalties for making an inaccurate return

Circumstance	Tax years up to year ending 5 April 2008 or accounting period ending on or before 31 March 2008	Tax years ending 5 April 2009 and later years or accounting period beginning on or after 1 April 2008
You sent HMRC a return showing less tax payable than the correct amount because you had been careless.	No penalty.	Between 15-30% of the tax due.
You sent HMRC a return knowing it showed less tax payable than the correct amount. (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the inaccuracy.)	Up to 100% of the tax due.	Between 35-70% of the tax due.

Penalties for failing to tell HMRC about your liability to tax

Circumstance	Tax years up to year ending 5 April 2009 or accounting periods ending on or before 31 March 2010	Tax years ending 5 April 2010 and later years or accounting periods ending on or after 1 April 2010
You started trading, made a gain, started letting property, or received other untaxed income and didn’t tell HMRC that you needed to make a return, but you weren’t deliberately trying to keep the information from HMRC.	Up to 100% of the tax due.	Between 20-30% of the tax due or 10% if you advise HMRC within 12 months from when the tax first became unpaid.
You deliberately failed to tell HMRC you had started trading, made a gain, started letting property, or received other untaxed income and needed to make a return. (You may have to pay penalties of up to 100% of the tax due if you tried to conceal the failure.)	Up to 100% of the tax due.	Between 35-70% of the tax due.

You may have to pay penalties of up to 100% (200% for offshore related income) of the tax due if you tried to conceal the extent of the undeclared tax. If this applies to you please call the Solicitors’ Tax Campaign Helpline on Telephone: 0300 013 4749.

If HMRC thinks that you haven’t included the right penalty in your disclosure, they may reject it.

Individuals can use HMRC calculators to help calculate the interest and penalties due on the income you are including in your disclosure.There’s a:

• calculator for Income Tax, Class 4 National Insurance contributions, interest and penalties for the tax years 2007 to 2008 up to 2012 to 2013
• interest and penalty calculator for the tax years 1994 to 1995 up to 2012 to 2013

Appendix B: interest due on payments made in the Disclosure

To help you work out the interest you should include in your disclosure, you can use the HMRC calculators.There’s a:

• calculator for Income Tax, Class 4 National Insurance contributions, interest and penalties for the tax years 2007 to 2008 up to 2012 to 2013
• interest and penalty calculator for the tax years 1994 to 1995 up to 2012 to 2013

If you’re unable to access the calculators, you can find details of interest rates on late payments for the various taxes and duties.

The sooner the Income Tax, Class 4 National Insurance contributions or Capital Gains Tax that you’re disclosing is paid, the lower the interest payable on the tax or contribution will be.