Final opportunity to settle tax liabilities on offshore accounts
1 Sep 09
Following HMRC’s introduction of the Offshore Disclosure Facility (ODF) in 2007, HMRC have launched a further disclosure initiative – the New Disclosure Opportunity (NDO) – to provide individuals with unpaid taxes linked to offshore accounts or assets a ?nal opportunity to settle their tax liabilities at a favourable penalty rate
If the total unpaid liability being disclosed is less than £1,000, no penalty should be levied under the NDO, albeit the outstanding tax and interest will need to be settled by the individual. If the total amount of the unpaid liability exceeds £1,000, the penalty rate will either be 10 per cent or 20 per cent of the total amount of the unpaid liability.
The 10 per cent rate should be available to all taxpayers making a disclosure under the NDO, except for those individuals to whom HMRC wrote in 2007 under the ODF offering the 10 per cent rate, but who did not make a disclosure at that time, and now wish to make a disclosure under the NDO. The penalty levied on these individuals will be 20 per cent under the NDO.
Those who choose not to take this further opportunity to disclose previously unreported tax liabilities and are subsequently found to have undeclared tax liabilities are likely to face a penalty of at least 30 per cent, rising to 100 per cent of the tax evaded. They also run an increased risk of criminal prosecution.
As with the ODF introduced in 2007, to obtain the favourable penalty rates it will be necessary for individuals to notify HMRC of their intention to disclose under this facility. The notification period will run from 1 September, for individuals notifying by paper, and 1 October for those making online notifications. The notification period for both will close on 30 November.
Once the notification has been made, individuals will be required to make full disclosure, including payment of all tax, interest and penalty, by 31 January 2010 for those disclosing by paper and 12 March 2010 if the disclosure is made electronically.