The client was a member of a defined benefits pension scheme and the growth in their pension rights in 2015/16 exceeded their annual allowance for that tax year.
The excess growth gave rise to an income tax charge (aka an “Annual Allowance Charge”) which was overdue and needed to be disclosed to HMRC.
We immediately registered our client with HMRC’s appropriate disclosure facility to minimise the potential penalties payable.
We then provided our client with calculations showing the potential income tax, interest, and penalties payable, explaining how these would be disclosed to HMRC and providing instructions on how to pay the amounts due.
After our client fully understood the position, we prepared a full disclosure to HMRC explaining how the Annual Allowance Charge arose and why the minimum possible penalties should apply given our client’s mitigating circumstances.
Following the submission, we kept in regular contact with HMRC’s disclosure team to ensure our client’s disclosure was being processed correctly.
HMRC accepted the disclosure in full and imposed no penalties on our client.
The final amounts payable only included the income tax from the Annual Allowance Charge and late payment interest.
The client was very satisfied with the outcome!