HMRC simplifies Lunn disclosure process

All of CLAC’s 7,000 clients have been legally required by HMRC to disclose any potential irregularities in their tax returns filed by the company - a lengthy process that is likely to cost more than £8,000 in accountancy fees if done through traditional routes.

However, Blue Skies Partnership managing director Steven Sykes and a special interest group - representing more than 300 TV freelancers - have negotiated a deal with HMRC that simplifies the disclosure process.

More than 1,500 of the embattled media accountancy’s clients have already made partial disclosures and are now required to divulge the full details of any potential irregularities in their tax returns.

Under the agreement with HMRC, freelancers will be able to follow some standard guidelines with their accountants when handing HMRC information on their accounts prepared by CLAC.

Significantly, it means that an accountant will only need to carry out a detailed “health check” on one year of accounts. This should indicate the potential errors across six years worth of accounts, which should be accounted for.

Other factors beyond the one year health check also need to be reviewed, including working patterns or whether a freelancer converted their tax status from sole trader to limited company in one particular year.

Sykes said lengthier process could cost - at a “conservative” estimate - between £8,000 and £14,000 in accountancy fees, while the simplified process should only cost up to £2,000.

The special interest group coordinator, who wished to remain anonymous, said the outcome was significant for freelancers caught up in the affair. She said that by bringing together a normally disparate group of self-employed TV producers, the group had acquired sufficient clout to influence the agreement with HMRC.

An HMRC spokeswoman said: “HMRC has from the outset aimed to make the disclosure process as simple as possible for our customers. Each case has to be looked at based on its own facts.

“We recognise that additional professional fees may be incurred and we have set out our guidance with that in mind. The level of professional fees charged by accountancy firms is not a matter that has been discussed by HMRC.”

It is understood that there is still the opportunity for CLAC clients to make partial disclosures before making a full disclosure. Those that do disclose will still have to repay any potential outstanding tax, but may be able to avoid any severe financial penalties associated with unpaid tax.

HMRC’s separate criminal investigation into CLAC is not likely to come to a head before next year. No charges have yet been brought against the company.