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Does a financial advisor have a duty to disclose information to the revenue?

(32 Posts)
taxattack Tue 11-Dec-12 11:42:26

I'd like to sort out tax returns which I've been lazy in dealing with. Would like to discuss with my financial advisor but wonder if he might have any professional obligation to disclose information to the revenue.

I'd rather sort it out rather than have the revenue come knocking which I seem to think would have worse financial implications. Am I correct in thinking this would be the case?

LadyKooKoo Tue 11-Dec-12 12:39:00

If it's tax returns I think you should be speaking to an accountant, not a financial advisor.

Notmadeofrib Tue 11-Dec-12 13:54:17

If you are committing tax evasion or fraud then yes it is part of the money laundering rules that we must disclose.

However if you are just in a mess then that is not a problem whilst you are genuinely trying to resolve the issue.

It would depend on what your tax issue is as to whether you require a tax specialist or not, but normally accountants are the people I would suggest you look to for assistance. Is there are reason you said your IFA is there investment income or such like?... or was it that you want an answer to a tax strategy you know is illegal! ! !

What I can tell you for certain though is that late returns can now clock up about £1600 EACH over time, even if you owe no tax. You really need to sort this out.

taxattack Tue 11-Dec-12 17:49:51

There is some rental income that never used to be an issue because there was never really a net gain after expenses. However after mortgage changed to lower interest rate there has been some gain and I have not got to grips with sorting it out.

Never filed returns before as there was no real income separate from taxable salary.

Would really like to sort out. What is best approach - contacting hmrc direct or going to accountant?

Would also like to utilise legal, efficient tax planning of this income so would like some advice. Would that be accountant or some kind of tax specialist.

Notmadeofrib Tue 11-Dec-12 20:30:00

Well I would suggest you need an accountant to ensure you are claiming everything you are entitled to. Their fee would be a worthwhile investment.

I would suggest the accountant is your first port of call as they will also advise you as to the best approach and will have experience in dealing with HMRC on such matters.

As for investing the money. The first thing one should do is pay down debt (mortgage debt is not immune from this, but is often regarded as a separate matter). Secondly create an emergency fund, 3 - 6 months net income. Once this is done, ISA's are the best thing (your emergency fund could be held in an ISA too). Depending on your attitude to risk, when you want the money for and various other factors would mean you would either look at cash or stocks and shares ISA's. Any investment period below 5 - 7 years should really be cash based.

taxattack Tue 11-Dec-12 21:16:10

NMoR, accountant sounds like way to go. Do you have any idea of how penalties/interest charges are determined for overdue taxes?

Sorry if I confused by referring to financial advisor - was not looking at consolidating debt/investing - just thought my FA would be a good person to speak with about tax position in the first instance since I don't have an accountant.

Gigondas Tue 11-Dec-12 21:21:27

Penalty and interest depends on how long outstanding and also if hmrc deem their to have been fraud or negligence involved in why tax is outstanding. .

taxattack Tue 11-Dec-12 22:11:20

laziness/negligence - looking grim

Alad Wed 12-Dec-12 06:03:13

IFAs are generally not qualified to give tax advice.

Gigondas Wed 12-Dec-12 08:05:07

Speak to a proper tax advisers as they should be able to advise not just on doing your returns but dealing with hmrc on penalties etc and in some cases negotiating a settlement.

tax adviser

taxattack Wed 12-Dec-12 23:27:40

Thanks Gigondas. Really want to sort out but the more I think about the potential penalties is the more I want to run away.

Toughasoldboots Wed 12-Dec-12 23:36:15

I was told that its more tax efficient to keep a mortgage on a rental property. It doesn't sound as if you are involved in huge tax fraud , I am sure a good accountant will sort it out with you.
I hate Jan tax assessments , hangs over Christmas.

MrAnchovy Wed 12-Dec-12 23:55:27

Gigondas, whilst the CIOT is a fine institution the vast majority of tax advisors dealing with individuals are not members of the CIOT.

This is the bread and butter of small and one-man-band accounting practices (like me and Talkinpeace) - best to get a personal recommendation.

Yes if HMRC come knocking any penalties are likely to be greater - under the new regime there is a scale with fixed ranges by which penalties may be reduced and a "prompted" disclosure carries a higher minimum penalty than an "unprompted" one.

MrAnchovy Wed 12-Dec-12 23:57:20

I hate Jan tax assessments , hangs over Christmas.

Then do it earlier in the year - there is no reason to wait until January to file the assesment, just put a note in your diary to make sure any payment gets there by 31 Jan.

Toughasoldboots Thu 13-Dec-12 00:03:24

It's dh not me, I would do exactly as you say. He is the mad professor type who leaves it until the last minute. Utterly frustrating.

MrAnchovy Thu 13-Dec-12 00:04:01

To answer your other question taxattack it is not a professional obligation to disclose information, it is a statutory one under the Money Laundering Regulations. If you tell an accountant that you have taxable income you haven't declared then unless you work with that accountant to sort it out she is likely to be required under MLR to notify HMRC and is not allowed to tell you about it.

riksti Thu 13-Dec-12 06:57:37

Just one extra point to add: if you've been renting the property commercially (that is, at market value) and in previous years the property made a loss then your tax bill might be lower than you think since previous years' losses can be carried forward against future profits which would limit the tax due. But you do need to notify HMRC of those losses so I would also suggest contacting an accountant to help you sort it all out.

taxattack Thu 13-Dec-12 09:27:45

Ok, this is all useful information. Will get my finger out.

TalkinPeace2 Thu 13-Dec-12 16:57:47

As MrAnchovy says, get an accountant by personal recommendation
they will find out a lot about so so it needs to be somebody you feel you can trust and talk to.
Penalties up to the current tax year could not be greater than the tax owed so if it was not much, they will be not much - and a half decent accountant will make it not much grin
HMRC are trawling Land Registry and mortgage data at the moment so its best to go to them before they come to you.

pippop1 Thu 13-Dec-12 17:00:51

Accountant is the way to go. As a general principle, it's usually preferable (fine wise) to approach the HMRC than have them approach you.

taxattack Thu 13-Dec-12 23:45:03

Personal recommendation is what I'd prefer but if that is taking too long where's a good source to pluck one from?

Can you tell that there's some fire at my tail?

TalkinPeace2 Fri 14-Dec-12 13:12:39

In the short run,
ask one of the bods on here ....
there are some REALLY good, professional, (fast) people on there ....

ChablisLover Fri 14-Dec-12 19:21:32

The ciot (chartered tax advsiers) do show one man bands as it where.

They have a find a tax adviser so you can put in your area and they all pop up and you can find one that way.

Personal recommendations are best but ciot advisers are highly qualified and the best to advise you.

I'm biased as I am a member but wou recommend you get this sorted as soon as possible. It won't go away and could easily get worse. I don't mean to scare you but I have seen happen. You have to make the first step and the rest comes easy and you will feel a weight has lifted as you are finally dealing with it.

TalkinPeace2 Fri 14-Dec-12 19:31:36

I'm ICPA (parted company with the ACCA)
but many of the people who will know the routes through will be QBE (qualified by experience) ex CCAB (the big institutes).
Anchovy I believe has been more careful than I and is still an FCA :-)

taxattack Sun 16-Dec-12 08:40:12

Have been away from thread. Will check out the website/organisations mentioned.

Is it reasonable to assume to most accountants dealing with personal taxation will be up to date with the nuances related to rental income eg tax breaks?

Also wonder if better to use someone accustomed to dealing with tax investigations? I picked up on the internet that there is some sort of amnesty on tax at the moment.

Forgive me if questions seem naive - seems that there are a lot of accountants out there who belong to various bodies and who do/specialise in many different areas.

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