HMRC have made a much simpler and easier process for voluntarily disclosing if you have not paid the right amount of tax. The Digital Disclosure Service (DDS) allows individuals who don’t qualify for one of the open HMRC Campaigns to voluntarily tell the tax office about any tax they are liable for but have not declared.

Who can use the Digital Disclosure Service?

HMRC work on the understanding that businesses and individuals want to pay the right amount of tax and so they do give you the opportunity to be open and honest about the tax you may owe. If you have miscalculated your tax or omitted taxable income, such as income from rented property or overseas loans, then the Digital Disclosure Service (DDS) allows you to inform HMRC that you need to disclose extra earnings and then gives you 90 days in which to calculate just how much tax you do need to pay.

You can use the Digital Disclosure Service (DDS) to inform the tax office about unpaid income tax, capital gains tax, corporation tax and national insurance contributions. Individuals, such as wives and husbands, will need to fill out separate disclosures for any missing incomes.

It can often be simple mistakes which lead you to not paying enough tax such as overlooking disguised remunerations from trusts or overseas loans but the sooner you contact HMRC once you realize the mistake then the better it will be for you.

The Digital Disclosure Service process

The HMRC computer system Connect cross-checks its database of companies against the taxes they have declared, and any discrepancies can lead to the tax office writing to you to chase up unpaid taxes. Once this happens, you will be looking at a fine of anywhere up to 200% of the tax you owe.

To start with the Digital Disclosure Service (DDS) process, you simply must notify HMRC that you plan to disclose more taxable income, calculate the amount of tax you owe over the next 90 days and fill out the Digital Disclosure Service (DDS) online, by post or alternatively, you can ask your accountant to do it for you. The Digital Disclosure Service (DDS) offers an Employee Benefit Trust (EBT) settlement opportunity for those still benefitting from the schemes as well as the option to appeal fines and avoid larger penalties. To sum up, whether you’ve not declared income due to a clerical error, or have been part of an EBT, it is essential that you act as soon as possible to correct any errors and pay the tax you owe.

If you are a contractor and have been issued Accelerated Payment Notice or you have been asked about the potential inquiry about a tax year and you feel that there are tax liabilities for other years, which need to be paid. Contact our team of specialist tax accountants at The Accountancy Solutions on 01216297768 or 02070784001.