New Disclosure Opportunity
The Chancellor’s Budget speech in April made reference to a “New Disclosure Opportunity” which will run from Autumn 2009; details of which are now finally emerging. This is effectively a re-launch of HM Revenue and Customs’ 2007 “Offshore Disclosure Facility” which attracted wide criticism. It secured only 40,000 disclosures from a possible pool of 400,000 pieces of information provided by the 5 major UK clearing banks about accounts held by UK residents in their offshore subsidiary branches.
The “offshore” reference has been deliberately removed to try and make it clear that the New Disclosure Opportunity will extend to all tax evasion, not just those instances where there is an “offshore” aspect. It is implicit that parties who take advantage of the scheme will be immune from prosecution in relation to the tax offences they disclose. Whilst no prosecutions have arisen against parties who failed to disclose under the 2007 scheme, a rather more hard line approach can be anticipated this second time around.
Full disclosures are being incentivised with a 10% penalty deal extended to people who come forward, but this will not extend to those parties who declined to disclose under the 2007 scheme, having received letters directly from HM Revenue and Customs confirming that information was held about them from the five major clearing banks. A 20% penalty (which is still favourable) will apply to people whose disclosure involves the use of offshore accounts with these major banks, namely, Barclays, HSBC, Lloyds TSB, RBS and HBOS. Note that in all cases interest will be charged by HM Revenue and Customs for the late payment of tax.
Anybody who is contemplating a disclosure must register their intention to do so with HM Revenue and Customs between 1 September and 31 October. A full disclosure must be submitted along with the outstanding tax by 12 March 2010. Whilst this may seem like sufficient time to prepare and submit the disclosure, a detailed forensic review can be time consuming.
If you are considering such a disclosure then you should contact Richard Nelson Solicitors who will assist you in preparing disclosure reports and provide you with guidance as to what HM Revenue and Customs will find acceptable. We will ensure that the information gathering and formulation of the disclosure is properly managed and cost effective. We can also help you quickly to ascertain if the New Disclosure Opportunity is the right process for you.
HM Revenue and Customs will expect disclosures to go beyond simply detailing how much undeclared interest has been earned upon offshore bank accounts. This somewhat naive approach was adopted by many inexperienced accountants and clients in response to the 2007 facility. There will be an expectation on the part of HM Revenue and Customs that the original funds deposited offshore have not been taxed, unless evidence to the contrary exists. We understand that a 30% penalty will apply if disclosures made under the new scheme are shown to be inadequate. It is conceivable that prosecutions will be brought in “extreme” cases of incomplete disclosure.
Delving back into history and reconstructing events can be very time consuming. Consider your position now and consult us at the earliest opportunity.