The HST Blog : Canada Harmonized Sales Tax Lawyer Cyndee Todgham Cherniak for Assessments, PST & RST Issues in Ontario, British Columbia & Quebec

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I honestly do not know the answer to this question.  I am baffled when a client comes to me after they have completed and sent to the Canada Revenue Agency ("CRA") their voluntary disclosure form in which they admit to a mistake in their harmonized sales tax (HST) compliance. They have already confessed their errors.  Then, when they see the HST assessment, the do not agree with the number and have a list of reasons.

I have been asked on many occasions to help correct the CRA auditor's misunderstanding of the facts - the same facts provided by the client in writing to the CRA in the voluntary disclosure form.  I cannot count the number of times a client has said to me "I did not mean to write that", "I should have been more careful in what I wrote", "I did not verify that information and it is in fact wrong", "I did not think about that", and "I just wrote something quickly".  I am asked to "fix this" ---  and, I have my work cut out for me.

Voluntary disclosures are similar to a "confession", albeit a voluntary disclosure is not often relaying criminal activities.  However, it is possible that a person will write information in a voluntary disclosure that could be used in a criminal investigation under the Excise Tax Act.  If you would seek the help of a lawyer when writing a confession, then seek the help of a lawyer when completing a voluntary disclosure form.  If you would take time to investigate facts and write, edit, review, redraft and reconsider the writing of a confession, then take time when completing a voluntary disclosure form. If you would take time to understand the consequences of writing a confession, then take time to understand the consequences of completing a voluntary disclosure.  If you would not want to cause a misunderstanding when writing a confession, then avoid misunderstandings when completing a voluntary disclosure form.

If you do not understand the law, you may miss opportunities to raise good facts that may be used to your benefit --- your actions have not all been bad have they?  You may not convey the important information and facts that support defences (such as the due diligence defence).  You may miss opportunities to support lower penalties.  You may miss opportunities to limit interest if there has been an officially induced error. 

Did you know that the CRA audits to "net tax" or do you even know what I mean by that?  You may be able to identify amounts that the CRA owes you and when you calculate "net tax" for the period in which you owe GST/HST, you may be able to subtract amounts you can show the government owes you.  There is a lot more to consider than "getting things off your chest".

Now that I have said my piece - here is the voluntary disclosure form.  The CRA calls this form "VOLUNTARY DISCLOSURES PROGRAM (VDP): TAXPAYER AGREEMENT", do not let the name fool you or cause you to be complacent.