Background
Following rulings against a number of major financial institutions, HMRC obtained details of approximately 400,000 offshore bank accounts belonging to people with UK addresses. It is estimated that the 400,000 accounts relate to around 260,000 individuals and that up to 25% of these individuals had not included income and/or interest from these accounts on their returns.
In April 2007, HMRC launched the Offshore Disclosure Facility (ODF), enabling investors with offshore accounts to disclose tax due on income and gains not previously included in their returns. 62,000 investors came forward in the initial registration stage, which closed on 22 June 2007. Around 45,000 of these came forward to disclose and pay by the 26 November 2007 deadline. Those who notified, made a full disclosure by 26 November 2007, and paid the amounts due were able to take advantage of the fixed 10% penalty.
HMRC is pursuing those with offshore accounts who did not come forward under the arrangements where there is a risk that the full amount has not been declared. In the most serious cases, criminal investigation may follow. The scheme has so far recovered around £400m in unpaid revenue. The cost to the Exchequer of running the scheme has been approximately £6.5m.
Current position on a new disclosure opportunity
During the evasion conference in Paris, the Financial Secretary informed members of the press that HMRC would be giving offshore account holders a new disclosure opportunity in 2009.
There are no specific details available at this time, but the objective will be to obtain information from additional financial institutions, using the same legal powers as applied to the first 5 banks.
The intention of the new exercise will be to provide an opportunity for account holders to inform us of their own accord, if they have unpaid tax or duties and to settle their debts in a similar way to the original offshore disclosure facility.
In anticipation of the new opportunity, HMRC will be extending an invitation to accountancy bodies to contribute through the Compliance Reform Forum to the design of this new disclosure opportunity.
