An accountant referred his client to Bedrock as he was concerned about potential tax liabilities because his client had been trading overseas as an individual and also through his own company. To further complicate things there were also issues surrounding his residency position.
Client challenge
The client concerned realised he had generated income offshore and wasn’t sure whether he had unpaid taxes as a result. He wanted to ensure his tax affairs were in order and up-to-date but was nervous of approaching HMRC direct. His accountant, having initially looked into his client’s situation felt it was more appropriate to bring in the Bedrock team as the issues were complex and it was likely that a negotiation with HMRC would be required and his accountant had no experience of this.
How did Bedrock help?
Bedrock reviewed all of the client’s tax returns, contracts of employment, bank and building society accounts to form a view of the client’s likely tax exposure. We determined the likely liability, interest and penalty applicable based on the facts of the case.
Bedrock then contacted HMRC, initially on a no-names basis, to establish whether there was a technical position which required a disclosure to made through the off-shore disclosure facility. On establishing there was we submitted the disclosure for the client and ultimately settled the case with HMRC.
Business impact and benefits:
Once a settlement was reached with HMRC we were able to reassure the client and give him peace of mind that his tax affairs were up-to-date. By managing the process we took away the headache of having to deal with HMRC and the client’s uncertainty about the correct course of action.
The client was delighted with the outcome, as the final settlement figure including tax, interest and penalties due it was less than he had expected. The accountant who had made the referral was pleased to have resolved a problem for his client without potentially losing him to a competitor.
It’s worth noting that under the new Requirement to Correct legislation if this client had not already made this disclosure he would have needed to register to do so by 30 September 2018 otherwise he could have been liable to a penalty of up to 200% of the tax liability.
In this case the client did not have to pay a penalty, though HMRC had considered applying a ‘careless penalty’. However because the client, with Bedrock’s help, had taken a proactive approach and was forthcoming throughout the process no penalty was applied.
Get in touch today if you’d like to discuss how we can help with making disclosures to HMRC or read more about the Requirement to Correct here.
