Step 1: get advice
Undeclared income guide
While we would advise you to report your failure to notify to HM Revenue and Customs as soon as possible, it is usually a good idea to get advice first. After reviewing the situation, your adviser should be able tell you how much tax you have failed to pay, how seriously HMRC will view your situation, and how best to approach them.
Once you have had professional advice, the matter should be reported to HMRC. This can be done by you or by your adviser. It should normally be in writing, as it gives you the chance to present your case in full, explaining any personal reasons why you failed to declare the income, and to include accounts or summaries of income and expenditure which indicate the level of income involved. This should help to ensure that HMRC responds to you appropriately.
To find an adviser, look at the choosing an adviser page.
If you take advice from an accountant or tax adviser, rather than a voluntary sector adviser, you must be prepared to make disclosure to HMRC straight away. This is because, due to anti-money laundering rules, tax advisers (who are not working on a charitable basis) are obliged to notify the authorities that you have broken the law once they are aware of your undeclared income.
If you cannot afford to pay for advice, or are simply unsure about contacting a regular tax adviser, TaxAid may be able to help you. TaxAid normally accepts calls only from clients on low incomes but in cases of non-disclosure and tax debt we are willing to discuss your case and advise you of the options available. Please note that we only advise individuals. We cannot advise corporate bodies. We do not advise on VAT.
You can contact the TaxAid helpline on 0345 120 3779 between 10am and 12 midday, Mondays to Fridays – select option 1. Provided you are within our remit, TaxAid will be able to:
• Advise how best to prepare your case for disclosure
• Check the level of your tax arrears
• Confirm HMRC’s likely approach in your case
• Assist you in making a full and complete disclosure.
Please note: It is not a good idea to visit a tax office, to tell them of your failure to declare your income, before you have written. The staff working on the reception desk will not normally be trained to deal with such cases, nor will you have a record of what you have reported, which may be very important later on.
HMRC has issued guidance on undeclared income. It can be found at https://www.gov.uk/undeclared-income.