How safe are safe deposit boxes?
They might keep possessions safe from harm, but deposit boxes used by taxpayers as a way of concealing undeclared income are increasingly likely to come to the attention of HMRC.
Operation Rize, a Metropolitan police operation which uses “search and seize” powers under the Proceeds of Crime Act 2002, began earlier this summer and nearly 7,000 safety deposit boxes at three London locations have been searched so far. The operation is aimed primarily at uncovering evidence of more general criminality, but it is likely that HMRC will be provided with details of the haul, and tax investigations as detailed as any tax return inquiry may follow. This is particularly likely if large quantities of cash are uncovered in the possession of a taxpayer who is self-employed, in a partnership or a company director. They may be called upon to prove that the cash doesnot constitute undeclared business takings.
There is currently a window for voluntary disclosure for anyone with tax issues associated with the contents of a safe deposit box. Such taxpayers might seriously consider making such a disclosure with specialist advice. This increases the chances for any outstanding matters to be settled on a civil rather than criminal basis – and a voluntary disclosure followed by full co-operation can lead to a mitigation in any penalty which is ultimately imposed.