Unpaid tax in UK

[Rodger]

If the person (not UK citizen) received some affiliate program income on one platform outside UK and used ID documents from different country on the platform while living in UK. Didn't declare that income and then left the UK.

If the person will disclose undeclared income and pay the taxes for previous years, will the authorities consider that person used offshore structure (since the KYC documents were from country outside UK and the platform is based outside UK) and put minimum 100% or even more penalty of unpaid tax?

Is it worth it to come forward and basically give almost all earned income to the government at this stage? How likely is prison term for 6-figure income for non-citizen?

I suppose it would be good to consult with lawyer, but afraid they can snitch to the taxman.

 

[Sols]

If the person will disclose undeclared income and pay the taxes for previous years, will the authorities consider that person used offshore structure (since the KYC documents were from country outside UK and the platform is based outside UK) and put minimum 100% or even more penalty of unpaid tax?

Which authorities?

Is it worth it to come forward and basically give almost all earned income to the government at this stage?

Having a clean SOF prevents a lot of future headaches.

How likely is prison term for 6-figure income for non-citizen?

You committed tax evasion in the UK. Since you have left the UK, there isn't much the UK will or can do unless you confess/get caught and return.

Prison sentences are rare for tax crimes. The vast majority are settled financially (with or without penalties). However, your case is probably viewed as aggravated since you didn't just make a mistake, you took active steps to hide your income.

So if we're talking about a six-figure tax debt, and if you return to the UK, and if they catch you — yes, there is a risk you would end up in prison. But the risk of getting caught is fairly low.

I suppose it would be good to consult with lawyer, but afraid they can snitch to the taxman.

It's complicated. Many actions and activities lead to tax evasion may be covered by LPP (Legal Protection Privilege) and not be reportable. That's how people can work with lawyers to regularize their affairs and enter into good faith negotiations with the HMRC.

But your case may be egregious. You may not be subject to LPP since you actively took steps to commit tax evasion.

However, approaching a trusted lawyer cautiously could still work, to find out what your legal options are.

 

[Rodger]

Which authorities?

HMRC

you didn't just make a mistake, you took active steps to hide your income.

Sorry, I forgot to state that the platform where the money was earned didn't require KYC at the time the person was in UK, that's why they only completed KYC with ID documents from different country after they've left the UK. Would this still be considered as taking active steps to hide income?

But the risk of getting caught is fairly low.

I guess I'm mostly afraid of someone reporting to HMRC that I have unpaid tax there. How likely that financial advisors will report someone to HMRC to get percentage of unpaid tax?

Also how likely that HMRC will seize all income earned and even more, if the person does unprompted disclosure?

 

[Sols]

HMRC

HMRC doesn't care particularly if your income if offshore or not. It's all taxable in the UK (unless you're registered as a non-domiciled resident). Keeping the money outside UK may be considered worse, but it's all the same tax fraud regardless of where the money sits.

Sorry, I forgot to state that the platform where the money was earned didn't require KYC at the time the person was in UK, that's why they only completed KYC with ID documents from different country after they've left the UK. Would this still be considered as taking active steps to hide income?

No, that's a bit different. You could conceivably get away with calling it a genuine mistake.

I guess I'm mostly afraid of someone reporting to HMRC that I have unpaid tax there. How likely that financial advisors will report someone to HMRC to get percentage of unpaid tax?

They don't get a reward for it. They get penalized if they don't report, though. So their incentive isn't to report everything they find, only in egregious or clear cut cases.

Also how likely that HMRC will seize all income earned and even more, if the person does unprompted disclosure?

Impossible to answer without looking at your entire financial situation (which the HMRC would do). They are aggressive but not evil. They won't put you out on the street. They'll work out a payment plan whereby you pay as much as you can as quickly as you can, though.

 

[Rodger]

They don't get a reward for it. They get penalized if they don't report, though. So their incentive isn't to report everything they find, only in egregious or clear cut cases.

Maybe I'm wrong but looks like whistleblowers get paid by HMRC, look HMRC pays over £500,000 to tax snitches
Though they would potentially get more money from services provided to you than from the government.

Thanks for the answers!

 

[Sols]

Maybe I'm wrong but looks like whistleblowers get paid by HMRC, look HMRC pays over £500,000 to tax snitches

AFAIK, those rewards are not available to lawyers and accountants. They have a duty to report, which takes away rewards. I'm not a UK lawyer and don't know which law takes precedence, though: whistleblower rewards or reporting obligations. Usually, reporting obligations are more important (and are not rewardable).

But if you're already in the gray zone and are worried about lawyer snitching on you, can't blame you for not wanting to pursue. It may however make any dispute with HMRC that much harder.

 

[wellington]

If the person (not UK citizen) received some affiliate program income on one platform outside UK and used ID documents from different country on the platform while living in UK. Didn't declare that income and then left the UK.

If the person will disclose undeclared income and pay the taxes for previous years, will the authorities consider that person used offshore structure (since the KYC documents were from country outside UK and the platform is based outside UK) and put minimum 100% or even more penalty of unpaid tax?

Is it worth it to come forward and basically give almost all earned income to the government at this stage? How likely is prison term for 6-figure income for non-citizen?

I suppose it would be good to consult with lawyer, but afraid they can snitch to the taxman.

Old... nom-dom argument, research that to see if it applies to you.