Making disclosures of critical information

Produced by Tolley in association with

Owner-Managed Businesses

Guidance

It is important that a tax return and / or supporting documents (if appropriate) contain adequate disclosure to prevent HMRC using its powers to make a discovery assessment. See the Disclosure ― relationship with discovery guidance note for further comment in respect of these powers.

Disclosure ― your aim

There is a difference between disclosing critical information in a tax return to protect a taxpayer from discovery and making a disclosure of an inaccuracy on a return.

See the Penalty reductions for inaccuracies guidance note for further details of such a disclosure. See also the Making disclosures of irregularities guidance note for information on the obligations on an adviser in respect of irregularities in a client’s tax affairs.

Adequate disclosure on a return also protects a client from a penalty if the treatment adopted proves to be incorrect. HMRC’s powers under FA 2007, Sch 24 deem that a careless inaccuracy incurs a penalty. However, where ‘reasonable care’ has been taken a penalty should not be charged. CH81010 details the circumstances

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