How to Use the HMRC Digital Disclosure Service

The HMRC Digital Disclosure Service is the online route for telling HM Revenue and Customs about tax you should have paid but didn’t. You use it in stages: notify HMRC that a disclosure is coming, receive a Disclosure Reference Number and a Payment Reference Number, then work out the tax, interest, and penalties for each year involved and submit and pay everything within 90 days.¹ Coming forward this way, before HMRC contacts you, is what unlocks the lowest penalty rates.

What the Service Covers

Individuals and companies can both use the service. It handles income tax, capital gains tax, inheritance tax, corporation tax, National Insurance contributions, and the Annual Tax on Enveloped Dwellings.¹ Typical situations include unreported rental income, overlooked capital gains from selling assets, business profits missing from a corporation tax return, and inheritance tax shortfalls.

Two boundaries matter before you start. VAT errors are not handled here; you either correct them on a later return or report them in writing on form VAT 652. And if HMRC has already opened an enquiry or compliance check into your affairs before you notify, they are unlikely to accept a disclosure through this route, and anything you do put forward will be treated as prompted rather than unprompted, which means higher minimum penalties.¹

Each disclosure covers one person or one company. Spouses who both have undisclosed income each need their own notification and disclosure. A company director with personal and company tax to sort out needs two separate disclosures.¹

Check Whether a Specialist Route Fits Better

The general service works for most situations, but two targeted routes may apply.

Worldwide Disclosure Facility

If any of the undisclosed tax involves income from outside the UK, assets held abroad, or funds transferred offshore, use the Worldwide Disclosure Facility. It applies to UK residents with foreign investments and to non-UK residents with British tax liabilities. You still notify through the Digital Disclosure Service and receive the same reference numbers, but you must also declare the maximum value of assets held outside the UK at any point over the last five years. If your situation is complex, you can request an extra 90 days on top of the standard window, up to 180 days in total.²

Let Property Campaign

Individual landlords with unpaid tax on residential letting income have a dedicated route. It covers a single flat, multiple properties, holiday lets, a room let above the Rent a Room Scheme threshold, and inherited property. Non-residential lettings like shops or garages are outside it, and companies and trusts cannot use it.³

A point that catches people out: if you use the Let Property Campaign, you must disclose all previously undisclosed income, not only the rental income. That includes any unreported business profits, investment income, and capital gains.³ In return, HMRC gives the maximum penalty reduction and will not publish your details as a deliberate defaulter, provided you cooperate and pay on time.

How Many Years You Need to Include

How far back your disclosure has to go depends on why the tax went unpaid:

Reasonable care but still got it wrong: 4 years.
Careless behaviour: 6 years.
Careless behaviour involving an offshore matter or offshore transfer: 12 years.
Deliberate behaviour: 20 years.

The 20-year window for deliberate behaviour does not apply to income tax, capital gains tax, or corporation tax for periods ending before 1 April 2010.⁴ You assess your own behaviour when deciding which years to include, and HMRC can challenge that assessment later if they disagree.

What to Have Ready Before You Notify

At the notification stage you don’t need figures or calculations. You’re just telling HMRC a disclosure is coming.¹ But the 90-day clock starts running from HMRC’s acknowledgement, so gather your material before you press submit.

You’ll need your National Insurance Number or Unique Taxpayer Reference to verify your identity. For the disclosure itself, pull together records for every year involved: bank statements, invoices, property rental agreements, share sale confirmations, and any other documents showing what was earned and when. Precise dates matter, because HMRC calculates interest from the date each payment was originally due, and getting this wrong can send the disclosure back for correction.

Notifying HMRC and the 90-Day Clock

The process starts on GOV.UK. You submit a notification saying you intend to disclose, and specify whether it concerns your own affairs, a company you direct, someone else’s affairs (as a tax adviser or personal representative), a trust, or a limited liability partnership.¹

HMRC then issues two reference numbers. The Disclosure Reference Number (DRN) links all your communications and filings to the same case. The Payment Reference Number (PRN) is what you use when paying, so HMRC can match the money to your disclosure.¹ Keep both safe.

The 90 days runs from the date HMRC acknowledges your notification, not the date you submitted it.¹ The full disclosure and full payment must reach HMRC before the deadline expires.

Working Out Tax, Interest, and Penalties

For each year in scope, you need three figures: the tax that should have been paid, the interest that has built up since it was due, and any penalty.

Interest

HMRC charges late payment interest from the date tax was originally due until the day you pay. As of 9 January 2026 the rate is 7.75%, calculated as the Bank of England base rate plus 4%.⁵ Because the rate moves with the base rate, a disclosure that spans several years usually involves more than one rate. Interest continues to accrue even where a payment plan is in place; it runs until the tax is actually paid.⁶

Penalties for Inaccuracies

Where the disclosure corrects an inaccurate return, penalties under Schedule 24 of the Finance Act 2007 depend on behaviour. For domestic (non-offshore) matters, the maximum rates are:

Careless: up to 30% of the tax lost.
Deliberate but not concealed: up to 70%.
Deliberate and concealed: up to 100%.⁷

If you genuinely took reasonable care but still made an error, there is typically no penalty. The careless category applies only where the mistake resulted from a failure to take enough care.

Penalties for Failure to Notify

A separate regime, Schedule 41 of the Finance Act 2008, applies where you never told HMRC about a tax liability at all (for example, you should have registered for self-assessment and never did). The domestic maximums mirror the inaccuracy figures: 30% for non-deliberate, 70% for deliberate but not concealed, 100% for deliberate and concealed.⁸

Higher Rates Where Offshore Matters Are Involved

If undisclosed tax involves income, gains, or assets in another country, Schedule 24 groups territories by how much tax information they share with the UK, and the penalty ceilings rise accordingly:

Category 1 (good information exchange): domestic rates apply, up to 30% / 70% / 100%.
Category 2 (limited exchange): up to 45% careless, 105% deliberate, 150% deliberate and concealed.
Category 3 (minimal or no exchange): up to 60% careless, 140% deliberate, 200% deliberate and concealed.⁷

The same territory-based uplift applies to failure-to-notify penalties.⁸ Identifying the territory’s category is one of the first steps when offshore income is involved.

How Cooperation Reduces the Penalty

The percentages above are starting points. HMRC reduces them based on the quality of your disclosure, assessed across three factors: how much you volunteer about what went wrong and why (telling), how actively you assist the process (helping), and how easily HMRC can review your documents (giving access).⁹

How far the penalty drops below the standard rate depends on those three factors, and the floor depends on whether the disclosure was unprompted or prompted. A careless inaccuracy at a 30% standard rate can fall to 0% unprompted but only to 15% prompted. A deliberate and concealed inaccuracy at 100% can fall to 30% unprompted but only to 50% prompted.⁷

HMRC’s handbook flags one restriction: if you took more than three years to correct a problem you knew about, HMRC will generally not reduce the penalty further than 10 percentage points above the minimum for your behaviour category.⁹

Submitting and Paying

Once the figures are ready, you enter everything into the disclosure form through the portal. Amounts are broken down by tax year, along with your self-assessment of behaviour for each year. HMRC sends a confirmation on receipt; keep it as proof of filing.

Payment is due before the 90-day deadline. Use the Payment Reference Number so HMRC can link the funds to your case. Electronic payment is the recommended method.¹

If you cannot pay in full within 90 days, contact HMRC before the deadline about a Time to Pay arrangement. These are agreed case by case. You have to show you genuinely cannot pay on time but can afford regular instalments, and HMRC expects the best terms you can realistically manage over the shortest period possible, typically a few months. Interest keeps accruing on the unpaid balance, and HMRC can withdraw the arrangement if you miss a payment or if new facts emerge.⁶

What Happens After You Submit

Submitting does not automatically close the case. HMRC can open a compliance check after receiving your disclosure, particularly if the figures look incomplete or the behaviour assessment seems generous. A disclosure made during an existing compliance check is only treated as unprompted in narrow circumstances: it must concern a failure unrelated to what HMRC is already checking, and you must have had no reason to think they would find it.¹⁰

The Cost of Waiting for HMRC to Find You First

The whole framework rewards coming forward first. For failure-to-notify penalties, a non-deliberate failure disclosed unprompted can carry no penalty; the same failure disclosed after HMRC prompts you carries a minimum of 10% within 12 months of the tax being due, or 20% after 12 months. For deliberate failures, the minimum unprompted penalty is 20%, rising to 35% when HMRC prompts you.¹⁰

Higher penalties are not the only consequence. HMRC can publish details of deliberate defaulters on GOV.UK, though they will not do this where they’ve given the maximum penalty reduction. Serious cases can lead to enrolment in the managing serious defaulters programme, meaning closer monitoring of your tax affairs going forward.¹⁰ In the worst cases, where someone knowingly provided false information or dishonestly understated their tax, HMRC may pursue criminal prosecution rather than civil penalties.

1
GOV.UK. Make a Voluntary Disclosure to HMRC
2
GOV.UK. Make a Disclosure Using the Worldwide Disclosure Facility
3
GOV.UK. Let Property Campaign – Your Guide to Making a Disclosure
4
GOV.UK. Compliance Handbook – Assessing Time Limits – What Are the New Time Limits – Introduction
5
GOV.UK. HMRC Interest Rates for Late and Early Payments
6
GOV.UK. Debt Management and Banking Manual – Time to Pay Introduction
7
Legislation.gov.uk. Finance Act 2007 – Schedule 24
8
Legislation.gov.uk. Finance Act 2008 – Schedule 41
9
GOV.UK. Compliance Handbook – CH63320
10
GOV.UK. Compliance Checks – Penalties for Failure to Notify – CC/FS11