24. Apr 15

Tax evasion: Typical mistakes with voluntary declaration

Although there are no formal requirements for a voluntary declaration in cases of tax evasion, mistakes can result in the ineffectiveness of the voluntary declaration and the threat of a conviction.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Tax evaders have the option of being able to return to a state of tax compliance by means of a voluntary declaration and in so doing avoid a conviction for tax evasion. However, the voluntary declaration needs to be error-free. If it is not then it may fail.

Typical mistakes with a voluntary declaration are, for instance, specifying an overly low tax liability or declaring them for periods of time that are too short. In order to avoid these and other mistakes, it is imperative that lawyers and tax advisors experienced in the field of tax law be consulted. They know what information needs to be included in the voluntary declaration for it to be complete and be able to take effect accordingly. Those who prepare a voluntary declaration alone or with the help of standard templates risk a flawed and thus ineffective voluntary declaration. The result can be high financial penalties or custodial sentences.

The voluntary declaration must be prepared in such a way that the tax office receives all of the necessary information in order to issue a new tax assessment notice. Thus, the sums of evaded taxes, the bank and the timeframe need to be clearly evident. Since the banks may require some time to furnish the necessary documents, the tax liability can also initially be estimated. However, the estimate ought to be as accurate as possible and certainly not too low. Furthermore, the authorities should be given a coherent explanation as to why the tax liability will initially only be estimated and an application filed with them to set an appropriate deadline for the submission of the missing documents.

In order for voluntary disclosure to be effective, the tax liability plus interest and, as the case may be, a penalty have to be paid within a relatively short timeframe. If this is not possible all at once, arrangements can be made with the tax office regarding instalments where appropriate.

From January 1, 2015, the rules for voluntary disclosure are expected to be tightened. The penalties are then likely to increase and the adjustment period extended from five to ten years. It is therefore advisable to submit the voluntary declaration this year.

For more informations: http://www.grprainer.com/en/legal-advice/tax-law/voluntary-disclosure.html

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