The new Disclosure Opportunity (NDO) is well under way, and businesses, individuals and tax advisers will be contemplating how best to proceed.
(For detailed information please read our comprehensive guide to the HMRC New Disclosure Opportunity.)
Further to the disclosure opportunity, HMRC recently released a press statement indicating that they had obtained authority from the First-tier tax Tribunal to issue information notices to over 300 banks requiring them to provide details of customers who hold offshore accounts.
The last disclosure opportunity was undertaken before the information powers in the Finance Act 2008 were written, so HMRC had to obtain Court Orders to persuade the banks to provide the information they required. For this reason, the information gained was limited to offshore accounts provided by the main UK banks. Now that the third party information powers in Schedule 36 are available, a Court Order is no longer necessary, although to obtain information about a large number of un-named individuals HMRC still need approval of the Tribunal.
Individuals with offshore accounts of any description were encouraged to come forward under the last disclosure scheme. However, it is likely that some considered the chances of being caught as low because they knew that their bank was not included in the last request for information. These are the very taxpayers that the NDO is now aimed at – and HMRC are being lenient by giving them a further opportunity to come forward and pay potentially significantly reduced penalties.
Those who don’t now take the opportunity can have no reason to believe that they don’t need to pay tax on overseas income – the theme of the advertisements has a technical reason. Once it has been adequately publicised that all offshore income is taxable if you are UK resident (subject of course to the remittance basis rules if they apply) then anyone who does not come forward must then be guilty of deliberately understating their tax, and HMRC will be entitled to go for a minimum of 70% penalty. 10% looks like a very good offer indeed in that light.
Moreover, Liechtenstein is also no longer a safe hiding place for untaxed wealth. On 11 August the UK signed a Tax Information Exchange agreement with the Government of Liechtenstein, and over the period up to 2015 a complete examination of all accounts and assets held there will be shared with the UK tax authorities. There is a separate Liechtenstein Disclosure Facility which will run from 1 September 2009 to 31 March 2015. (Read our comparison of the Liechtenstein Disclosure Facility and the New Disclosure Opportunity here.)
