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Tax evasion: Only voluntary disclosure affords protection from severe penalties

April 2017 - Tax & Private Client. Legal Developments by GRP Rainer LLP.

More articles by this firm.

Anyone who has been caught for tax evasion should expect to be faced with severe penalties. Voluntary disclosure is the only way of returning to a state of normal tax affairs and avoiding penalties.

While the number of voluntary declarations leading to immunity in relation to tax evasion is decreasing, this does not mean that they are no longer required or that the authorities are easing off in the fight against tax evasion. On the contrary, the cross-border effort to combat tax evasion continues to be stepped up. Among other things, the automatic exchange of financial information that is set to begin this year will make it increasingly difficult for tax dodgers to conceal untaxed income in foreign accounts from the exchequer.

Those who nevertheless attempt to do so are playing a risky game, as tax evasion is met with severe penalties. In the event of a conviction, those concerned could be faced with hefty fines or even custodial sentences. Voluntary disclosure is the only way out of this situation that leads to immunity. Having said that, the voluntary declaration needs to be submitted on time, i.e. before the tax evasion is discovered by the authorities.

Moreover, voluntary declarations leading to immunity are not a sure-fire success. Not only do they need to be submitted on time, they must also be complete and contain no errors. Even small mistakes are not forgiven and can result in a voluntary declaration being ineffective. That is why voluntary declarations should always be prepared with the help of competent legal assistance.

Anybody who decides to forgo this assistance and prepare a voluntary declaration on their own or using standard templates is running the risk of voluntary disclosure failing. It is simply unmanageable for a layperson to keep track of the requirements set out by the legislature for voluntary disclosure leading to immunity and even more difficult to fulfil these, especially since each case of tax evasion is unique and there are accordingly no ready-made solutions for an effective voluntary declaration.

Those who wish to play it safe when it comes to voluntary disclosure should therefore seek the assistance of lawyers who are experienced in the field of tax law. They can assess the circumstances of each individual case and tailor the voluntary declaration so that it includes all of the necessary information and documents while confidentially and discretely working together with their clients.

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