Making disclosures of critical information

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

Making disclosures of critical information
Disclosure - your aim
Consent for disclosure
Making the disclosure

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 24deem that a careless inaccuracy incurs a penalty. However, where ‘reasonable care’ has been taken a penalty should not be charged. CH81010 details the circumstances where a penalty is payable in respect of inaccuracies. Also, see the Calculating the penalty for inaccuracies in returns - behaviour of the taxpayer guidance note for further details.

The guidance at CH81120 states that a taxpayer should take care to find out about the correct tax treatment or seek appropriate advice in respect of a return entry. However, if the taxpayer remains uncertain of the tax position, drawing attention to the entry and the uncertainty in the return will be taken as reasonable care if the treatment proves to be incorrect.

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