What to do if you’ve never declared your income
If you tell HMRC about income you haven’t declared before, you usually won’t be prosecuted and may face smaller penalties. HMRC often tries to work out a payment plan based on what you can afford.
Steps to take
- Get advice first – Talk to an accountant or tax adviser. They can check how much tax you owe, how serious HMRC may view your case, and the best way to report it.
- Ways to report your income
- Through an HMRC campaign – HMRC runs campaigns for specific groups (like landlords or electricians) to declare undeclared income. Penalties are usually lower . Deadlines apply; missing them can lead to higher penalties or prosecution.
- Directly to HMRC – If there’s no campaign for you, you report income straight to HMRC. Professional advice is important here. You can also use HMRC’s Voluntary Disclosure Helpline.
After you report
- An HMRC inspector will review your case and may ask for documents or meetings.
- You’ll usually need to complete tax returns for all the relevant years.
Risk of prosecution
- You’ve broken the law if you haven’t declared income.
- Voluntary disclosure before HMRC suspects anything greatly reduces the risk.
- If prosecution is possible, seek legal advice immediately.
How far back HMRC can go
- 4 years if you acted reasonably
- 6 years if you didn’t take reasonable care
- 20 years if you deliberately hid income
What happens after disclosure
- HMRC usually seeks a financial settlement: unpaid tax + interest + penalties.
- Penalties depend on your behavior; trying to mislead HMRC increases them.
- HMRC will usually suggest an amount to pay. You’ll sign an agreement to pay by a certain date. Full honesty is crucial—hiding income after disclosure can lead to prosecution.