UK announces Offshore Disclosure initiative details
HM Revenue & Customs announced, on 28 July 2009, details of the New Disclosure Opportunity (NDO), the second HMRC-run offshore disclosure initiative, which will be the last chance to settle unpaid taxes linked to offshore accounts or assets to settle tax liabilities at a favourable penalty rate.
Under the 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.
"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 NDO to pay what they owe with penalties on more favourable terms than normal," said Dave Hartnett, HMRC Permanent Secretary for Tax. "This will be the last opportunity of its kind."
To use the NDO a notification of the intention to disclose must be made to HMRC between 1 September and 30 November 2009. Disclosures can then be made on paper from 1 September 2009 to 31 January 2010 and electronically from 1 October 2009 to 12 March 2010.
The penalty rate of 10% will apply to those who were not written to by HMRC under the ODF, which ran from April to November 2007. 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%.
When the NDO 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.
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