New Disclosure Opportunity for offshore accounts

1 September sees the launch of HM Revenue & Customs’ New Disclosure Opportunity (NDO). The NDO offers taxpayers with undeclared income or gains from offshore accounts or assets a final opportunity to make a full disclosure, in favourable circumstances.

Under the scheme, the penalty will be capped at 10% for those taxpayers who were not contacted by HM Revenue & Customs (HMRC) during the previous Offshore Disclosure Facility in 2007. Those who were previously contacted by HMRC will be subject to a 20% penalty.

Furthermore, tax inspectors will now be able to enlist the help of more than 300 banks and financial institutions when coordinating the campaign. Following a recent tribunal ruling, HMRC can issue compulsory disclosure notices to the banks, ahead of the NDO. Banks will be required to reveal details of customers’ payments and transfers to overseas accounts. Officials will then cross-reference this information with that supplied voluntarily by individuals to check that the correct amount of tax is paid.

Dave Hartnett, HMRC’s Permanent Secretary for Tax, said: ‘I know there are people who regret not taking advantage of our Offshore Disclosure Facility in 2007. I urge any of them who have unpaid tax liabilities connected to [offshore] accounts now or in the past to come forward and make a full disclosure’.

To use the scheme, a notification of the intention to disclose must be made to HMRC between 1 September and 30 November 2009. Those taxpayers notifying on paper can do so from 1 September to 30 November, while those notifying electronically can do so from 1 October to 30 November.

Disclosures can be then made from September 2009 to January 2010 on paper, or from October 2009 to 12 March 2010 electronically.

Once the NDO ends on 12 March 2010, HMRC will ‘vigorously pursue’ all outstanding liabilities. Those taxpayers who have failed to come forward and are found to have unpaid tax liabilities will face penalties of between 30% and 100%, and will run an increased risk of prosecution.

The Revenue’s first amnesty was launched in 2007 and targeted the five major UK high street banks. Then penalties were capped at 10% of the outstanding tax owed, plus interest. HMRC recouped some £400 million in unpaid taxes from around 45,000 people who disclosed details of concealed assets.

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