HMRC: Offshore Disclosure Initiative Launch

HM Revenue & Customs (HMRC) has confirmed the details of a new disclosure initiative that will allow people with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities at a favourable penalty rate.

Under the New Disclosure Opportunity (NDO) people who make a complete and accurate disclosure between 1 September 2009 and 12 March 2010 will qualify for a 10% penalty. Those who choose not to take this opportunity and are subsequently found to have undeclared tax liabilities are likely to face a 30% or higher penalty and also run an increased risk of criminal prosecution.

The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said:

“I would urge anyone with offshore accounts holding untaxed income or gains to take advantage of this simple and straightforward scheme.

“Most offshore investors already pay the tax that the law requires and it’s only fair that everyone respects the rules.

“Tax evasion is not a victimless crime. It deprives our public services of vital funding and places an unfair burden on the honest majority of taxpayers.”

Dave Hartnett, HMRC Permanent Secretary for Tax, said:

“I know there are people who regret not taking advantage of our Offshore Disclosure Facility (ODF) in 2007 which focused primarily on the customers of five large banks. Now everybody who has not paid the tax they should in relation to offshore accounts or assets has this New Disclosure Opportunity to pay what they owe with penalties on more favourable terms than normal.

“The procedure is simple and straightforward. Customers will be able to contact us on paper or through a dedicated area of our website.

“This will be the last opportunity of its kind.”

Details

1. To use the NDO a notification of the intention to disclose must be made to HMRC between 1 September and 30 November 2009.

2. Those notifying on paper can do so from 1 September to 30 November.

3. Those notifying electronically can do so from 1 October to 30 November.

4. Disclosures can then be made:

- on paper from 1 September 2009 to 31 January 2010

- electronically from 1 October 2009 to 12 March 2010.

5. The penalty rate of 10% will apply to those who were not written to by HMRC under the ODF in 2007.

6. Those to whom HMRC wrote to in 2007 offering the 10% rate but did not complete the ODF procedure and now want to disclose will have an opportunity to do so with unpaid tax attracting a penalty of 20% which is more favourable than normal whilst demonstrating that special rates once declined are unlikely to be repeated.

7. The ODF ran from April to November 2007.

8. Once this disclosure window closes on 12 March 2010, those taxpayers who have not come forward but are found to have unpaid tax liabilities will face penalties of at least 30% rising to 100% of the tax evaded. They also run a risk of criminal prosecution.