What is unprompted vs prompted disclosure?

The label attached to your disclosure, unprompted or prompted, sits alongside the behaviour category to set your final penalty percentage.

Unprompted means you told HMRC about the error before you had any reason to think they were onto it, whether through a nudge letter, an enquiry notice, or informal contact suggesting a check was coming.

Prompted means you disclosed after that point, typically once HMRC has already opened a compliance check or made clear it's looking at the relevant year.

Paragraph 9 of Schedule 24 Finance Act 2007 sets the test: a disclosure is unprompted if made at a time when the person making it has no reason to believe that HMRC has discovered, or is about to discover, the inaccuracy.

This is a factual question, decided on the circumstances at the moment you disclosed, not with hindsight. Receiving a general information request doesn't necessarily mean you had reason to believe HMRC had found your specific error.

The statutory ranges for each behaviour category are split into an unprompted band and a prompted band, with the unprompted band always starting lower and typically capping lower too.

If you spot an error in your company's accounts or your own Self Assessment before HMRC raises it, disclosing straight away, rather than waiting to see if it gets noticed, keeps you in the more favourable band.

This matters in practice when a director discovers a historic mistake, perhaps in a director's loan account or an expense claim, during a routine review. Reporting it voluntarily is treated very differently from waiting until a compliance check letter arrives.

Timing is judged at the point of disclosure, so once an enquiry letter lands, the unprompted window has usually closed for that year, even if you were already planning to come forward.

The gap between unprompted and prompted penalty ranges can be significant, so acting first, before HMRC contacts you, is one of the few genuinely cost-saving choices available once an error is found.

Beyond the penalty rate, coming forward voluntarily also tends to shorten the overall process, because HMRC has less to investigate when you've already explained the error and quantified the tax due.

Growth plan clients have free tax investigation insurance included, covering professional support whether you're making a voluntary disclosure or responding to an enquiry — see /fees.

Don't wait to see if HMRC notices before disclosing. Once they've made contact, the unprompted window is gone for good on that issue.

Don't assume a general nudge letter about a whole sector automatically makes your specific disclosure prompted; the test depends on what you had reason to believe.

Don't disclose without first quantifying the tax properly. An incomplete or inaccurate voluntary disclosure can undermine the cooperation credit you were hoping to gain.