Contact us on:
T. 0141 848 7474
F. 0141 848 7419
E. mail@johnmtaylor.co.uk
Tax Amnesty 2009
Following the Offshore Disclosure Facility in 2007 (ODF), HMRC
announced that a second, and final, New Disclosure Opportunity (NDO) will
run during 2009. The scheme will run from 1 September 2009 until 12 March
2010 and is targeted at individuals who hold funds in offshore accounts
but have failed to notify HM Revenue & Customs of the investment income
received on these accounts. By signing up to the NDO taxpayers will receive
a reduced penalty of 10% rather than the 30%-50% penalty outside of the
NDO.
The ODF in 2007 was targeted at 100,000 taxpayers of which only
45,000 - 50,000 responded to HMRC's invitation to make a disclosure. Of
the 50,000 non-disclosure cases, 20,000 or so notified HMRC that they intended
to make a disclosure (i.e. admitted that they had income to disclose) but
then never followed it up with an actual disclosure. The remainder simply
ignored the ODF and failed to take any action.
As HMRC have now received information from as many as 500 banks
(rather than the 5 in the earlier ODF) it has elected to introduce the new
NDO for a period of just over 6 months to allow taxpayers to voluntarily
disclose their offshore income. Failure to make a disclosure where one is
required will result in an enquiry from HMRC and potential prosecution depending
on the circumstances.
It is understood that with the new NDO, HMRC are targeting around
100,000 individuals who have savings or investments held in offshore accounts
and whom HMRC believes to be paying an incorrect amount of tax. It is anticipated
that the NDO will raise around £1billion for the Treasury in comparison
to £400million raised by the 2007 scheme.
Who is affected?
- Anyone with savings or investments held through an offshore account and who have not reported that income on their Annual Tax Return.
- Anyone with savings or investments held through an offshore account and who, not completing a Tax Return each year, has failed to notify HMRC that the offshore income source exists.
- Anyone who was written to by HMRC during the last offshore disclosure scheme and who did not make a disclosure the last time around and has not yet reported the income source.
Unlike the ODF, HMRC will not be writing to taxpayers to confirm that it
is aware of their offshore income/assets. Given how many financial
institutions have provided details to HMRC taxpayers should expect their
details to be with HMRC and take advantage of the disclosure opportunity. If
they don't, then there is the real possibility that they could be subject
to a robust investigation by HMRC in the future.
Why should I disclose my offshore income source?
As stated HMRC have obtained the personal details of a large number
of UK residents who hold bank accounts or investments with offshore entities,
or offshore divisions of UK banks. They are therefore aware of who they
expect to make a disclosure and it is likely that any UK taxpayers, for
whom they have received details of offshore accounts but no disclosure,
will shortly receive an enquiry into their tax affairs to ascertain if,
and how much, tax has been underpaid. Anyone falling into this category
that should have made a disclosure and did not, will receive a penalty of
between 30% to 100% of the tax underpaid, potentially doubling their liability.
Alternatively, making a disclosure through the NDO will guarantee a penalty
fixed at 10% (unless HMRC wrote to you in 2007 during the previous disclosure
scheme in which case the penalty will be set at 20%).
Is it only open to individuals with undisclosed offshore income?
Unlike the first scheme in 2007, it appears that there is no parallel
onshore disclosure scheme for individuals with unreported onshore income.
However, it is believed that individuals who have undeclared onshore income
should be able to benefit from the 10% penalty if they make the disclosure
in the correct way. Provided the onshore disclosure is unprompted and voluntary
then, if all the other NDO criteria are met, the 10% reduced rate penalty
will likely be available.
It should however be noted that onshore disclosures may be scrutinised
in more detail due to the fact that HMRC will be unable verify the disclosure
as easily as the offshore disclosures (due to the fact that they won't have
a list of information received from the banks etc. to check the disclosure
against)
What information has HMRC received?
Unlike the 2007 scheme, the information received by HMRC this time
around is much more wide ranging. It covers customers of offshore banks
and those of all building societies and financial institutions which provide
offshore accounts. Similarly, it also covers any possession or property
available to meet debts, such as bonds or other financial instruments, as
well as land and property, trusts, business interests, yachts and vehicles.
Key Dates
Commences Closes
Notification of intention to disclose (Paper) 1 September 2009
30 November 2009
Notification of intention to disclose (Electronic.) 1 September
2009 30 November 2009
Disclosure Period (Paper) 1 September 2009 31 January 2010
Disclosure Period (Electronic) 1 October 2009 12 March 2010
What should I do next?
If you feel that you have income that has not previously been declared
to HM Revenue & Customs and would like to take advantage of the reduced
penalty available under the NDO scheme please give us a call as soon as
possible so that we can assess what information will be required and what
should be done.