Remedial

Over time, several disclosure facilities have been introduced to encourage taxpayers to regularize their affairs, notably the Lichtenstein Disclosure Facility (LDF), Contractual Disclosure Facility (CDF), and the Worldwide Disclosure Facility (WDF). These initiatives offer favourable terms to promote voluntary compliance and rectification of tax matters.

Critics argue that HMRC’s approach, offering widespread immunity from prosecution in exchange for full cooperation, is overly lenient. However, there are compelling justifications for this strategy:

• Government departments, focused on annual budgets, prefer avoiding lengthy and costly trials with uncertain outcomes.
• Convicted individuals may lack the means for restitution, making negotiated repayment plans more beneficial for the state.
• The cost of enquiries often exceeds the additional tax, interest, and penalties recovered, suggesting a net loss for HMRC.
• Rehabilitation of non-compliant taxpayers allows businesses to continue contributing to the economy through employment and taxes.

Despite criticism, schemes like the LDF have reportedly exceeded expectations, collecting significantly more than anticipated. This success illustrates that incentives can be more effective than threats in encouraging compliance.

Our experience with the CDF, in particular, has proven invaluable for clients facing the stress of potential non-compliance, even for minor discrepancies. We excel in guiding clients through full disclosure processes, often resolving issues that seemed insurmountable. Our expertise can help unwind past mistakes discreetly, offering a pathway to resolution that benefits both the taxpayer and HMRC.

If you’re concerned about your tax position and fear the implications of discrepancies, we encourage you to contact us in confidence. What may seem like a significant issue can often be resolved through voluntary disclosure mechanisms such as the Digital Disclosure Service. Let us help you find peace of mind and a positive way forward.