Soliciting VDs?

Several clients of a colleague of mine have received letters from the CRA requesting that the taxpayers make a disclosure to the CRA if they happen to find unspecified errors in their tax returns.

One of the letters relates to securities bought and sold outside an RSP; another letter relates to rental operations. The CRA letters note that the taxpayers have traded securities outside an RSP or claimed expenses relating to a rental operation for a particular taxation year. The letters invite the taxpayers to request an adjustment from the CRA within 30 days of the date of the letter if the taxpayers discover errors in the reported income for the trades/rental operations.

The CRA seems to be soliciting a species of voluntary disclosure with these letters, but the letters state that an adjustment made in response to them can be transmitted on a T1ADJ, which is not the form used for a voluntary disclosure. On the other hand, the letters do mention the voluntary disclosure program. Would adjustments made in response to the letters constitute voluntary disclosures of some sort? The CRA generally gives a taxpayer only one kick at the VD can, and the CRA generally also accepts that a disclosure is voluntary only if it is not triggered by a relevant inquiry from a tax authority. If a response to an inquiry letter is not a voluntary disclosure, will the CRA seek to impose penalties if a taxpayer responds to the letter with a significant amendment to his or her tax return? The letter provides no assurance in this regard. What if the taxpayer does not respond to the inquiry letter and then decides later to try to make a voluntary disclosure on an issue related to the subject of the letter? Will the CRA accept that the disclosure is voluntary given the existence of the inquiry letter?

Anyway, I suppose it’s woe to the taxpayer who does not review his or her return in response to an inquiry letter where the CRA discovers an error later during the course of an audit.

Is anyone else or their clients receiving letters like these?