CH123406 | Offshore matters: requirement to correct certain offshore tax non-compliance: failure to correct - penalties - voluntary and non-voluntary disclosure

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH123050 for full details.

Whether a disclosure is voluntary or non-voluntary is an objective test.

A disclosure is voluntary if it is made at a time when the person making it has no reason to believe that we have discovered or are about to discover the failure to correct offshore tax non-compliance. Otherwise it is a non-voluntary disclosure.

A disclosure will be treated as voluntary even if at the time it is made the full extent of the disclosure is not known, as long as the full details are provided within a reasonable time.

All the facts need to be considered before deciding if a disclosure is voluntary or non-voluntary. You should apply a common sense approach in deciding whether or not a disclosure is voluntary and avoid making hasty judgements.

Determining voluntary or non-voluntary disclosure

The particular facts and circumstances of the disclosure are the basis of the test, not the belief that it was either voluntary or non-voluntary.

A national campaign highlighting an area of the trading community on which HMRC will be concentrating would not stop a disclosure from being voluntary. However a disclosure would be non-voluntary if a person made the disclosure after

• we contacted them to tell them we wished to make a compliance check of their return

• we arranged to visit their premises to explore the risks we had identified, or

• HMRC has been supplied with information, under an automatic exchange of information agreement that would, when reviewed, lead to the discovery of the issue being disclosed. This would not apply where the person had no reason to believe that the information had been supplied to HMRC.

It will be exceptional for a disclosure to be accepted as voluntary if a compliance check is in progress. The disclosure will be voluntary only if it is about something the compliance officer has not discovered or is not about to discover.

A disclosure may be made during the course of a compliance check. If it is related to the subject matter being reviewed then it will be considered to be a related disclosure and therefore non-voluntary.

A person is only able to disclose something they know is wrong. They may be genuinely unaware that they have done anything wrong. However, a disclosure made after we challenge a particular issue cannot be voluntary.

The concept of voluntary and non-voluntary disclosures is very similar to that of prompted and unprompted disclosures used in relation to Schedule 24 penalties. For practical examples of unprompted or prompted disclosure in relation to penalties under FA07/SCH24, see CH82422.