Delinquent Returns, Disclosure & Audits
What we offer for Delinquent Returns, Disclosure & Audits
When it is time to get up to date, we review your circumstances, determine your obligations, and advise on the best way to meet those, taking account of tax liability, penalties and risk tolerance.
Explore our range of solutions below or, if you are interested in talking to us about your tax situation – get in touch via our contact form.
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UK/US PRIVATE CLIENTS
Guidance on Filing Late US Returns with the IRS
When you are late with your US taxes, this is a worrying position and includes uncertainty on potential liabilities and penalties. The IRS sometimes allows penalty relief if you have reasonable cause or if it’s your first time. Special programs exist (see later), such as the Streamline Procedures, to help people catch up on missed filings, but you must meet certain eligibility requirements. We review your circumstances, determine your obligations, and advise on the best way to meet those, taking account of tax liability, penalties and risk tolerance.
Guidance on Late Filings of the Report of Foreign Bank and Financial Accounts (FinCEN Form 114), referred to as the “FBAR”
The FBAR is a critical part of compliance for US persons with foreign bank and financial accounts primarily because, late or inaccurate filing of the FBAR can lead to severe penalties in the case of certain non-wilful and wilful failures. Accurately determining what has to be reported and the best way to submit late filings is key.
Guidance on Filing Late UK Returns with HMRC
Filing late UK tax returns can lead to penalties and additional charges, regardless of whether the taxpayer owes any tax. However, HMRC offers certain programmes (e.g. WDF), which may be a better route to settle in lieu of tax, penalties and interest. Coming forward unprompted, will full cooperation, as well as advocacy on culpability can reduce potential penalties. We also need to consider time limits on certain claims and elections when filing late.
Assistance with HMRC Nudge Letters – Re. Errors and Omissions
HMRC uses nudge letters to prompt taxpayers into reviewing their previous submissions and correcting any errors or omissions. These letters may target undisclosed foreign income or gains, often identified through HMRC’s data-sharing agreements. Getting a letter is daunting, and we are here to help advise on whether an omission has occurred (in many cases it is an error or misunderstanding) and how to reply to HMRC.
Assistance with HMRC Enquiries
HMRC enquiries can stem from routine compliance checks or specific concerns over irregularities in tax filings. These enquiries require a thorough review of all submitted documentation and transactions to ensure accuracy but also understanding of time limits and HMRC powers. We encourage co-operation with HMRC and provide advocacy on the tax position (once verified as correct) and culpability.
Assistance with HMRC enquiries
HMRC enquiries can stem from routine compliance checks or specific concerns over irregularities in tax filings. These enquiries require a thorough review of all submitted documentation and transactions to ensure accuracy but also understanding of time limits and HMRC powers. We encourage co-operation with HMRC and provide advocacy on the tax position (once verified as correct) and culpability.
Assistance with IRS Audits
IRS audits can be highly complex and stressful. An audit may result from random selection or, more commonly in our experience, discrepancies found in filed returns with IRS data (so called ‘matching audits’). Quick and accurate responses to the IRS’s requests for information lead to the swiftest resolution and reduce exposure to further penalties or interest and wider investigation.
IRS Streamlined Filing Offshore Procedures
The IRS Streamlined Filing Offshore Procedures (SFOP) are designed for US taxpayers who were non-wilful in their failure to file US returns and report foreign income or assets. This program provides waiver of significant penalties, provided eligibility criteria are met. Participants must certify their non-wilful conduct and submit forms for the relevant years, along with applicable taxes and interest. We can help determine if this is the best route for you, assess eligibility, determine relevant filings and tax years, and ensure accurate preparation and calculation of tax liabilities.
IRS Streamlined Domestic Offshore Procedures
For taxpayers residing in the US (or not meeting the SFOP requirements), the IRS Streamlined Domestic Offshore Procedures (SDOP) offers an opportunity to amend returns for omitted foreign accounts, assets, entities and income. The procedures include a fixed 5% asset-based penalty, which can be lower than standard penalties. In other cases, reasonably cause abatement of penalties (a higher standard than non-wilful) may be a better position.
IRS Voluntary Disclosure Program
The IRS Voluntary Disclosure Program (VDP) is designed for taxpayers who wilfully failed to comply with their reporting obligations. By participating in this program, taxpayers can avoid prosecution and mitigate penalties, although the starting penalty rate is high. An attorney is advised to assist with a VDP due to the implication of wilful and criminal behaviour. We support clients and legal advisers with the meticulous preparation of past returns, detailed disclosures and document collection.
HMRC Worldwide Disclosure Facility
The Worldwide Disclosure Facility (WDF) is our most commonly used process to disclose unpaid UK taxes – often, but not always, related to offshore income, gains, or trust matters. Designed for voluntary disclosures, the WDF encourages taxpayers to make an unprompted, transparent, cooperative disclosure in order to mitigate penalties and accurate and comprehensive calculation of tax is critical before signing a disclosure statement. We generally supplement our approach with a report to HMRC to advocate technical positions and the penalty rate.
HMRC Let Property Campaign
The HMRC Let Property Campaign helps landlords disclose previously undeclared rental income. This is usually suitable when the omission is only the rental income. Voluntary disclosure should lead to lower penalties and the campaign provides a simpler process.
