HMRC offshore tax: more publicity please

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Tax
Written by Paul Williams   
Wednesday, 17 June 2009

“The NDO will be a good deal for both individuals, allowing them to come clean relatively cheaply."

 

HM Revenue & Customs (HMRC) will launch a New Disclosure Opportunity (NDO) in September this year but calls are being made for a greater publicity drive to publicise the event.

The calls were made as tax professionals say the last disclosure scheme was badly advertised and many individuals missed out as a result.

John Cassidy, Tax Investigations Partner at PKF Accountants & business advisers, fears that many offshore bank account holders may not even notice if the process is repeated.

 

Cassidy explains:


“It is widely agreed that the last amnesty, the Offshore Disclosure Facility (ODF) in 2007, was poorly publicised by HMRC. The take up rate for the ODF was significantly lower than expected and this was largely because many of the individuals potentially affected really knew little about it. Sadly, HMRC spent lots of time and effort putting the ODF in place but barely any effort in promoting awareness of it.”
 
Examples of poor publicity and lack of clarity on the ODF included:

Unlike the ‘shop your plumber scheme’ there were no major press or TV campaigns promoting the ODF, despite the fact that HMRC expected it to yield far more tax revenue.

HMRC only wrote to customers of the five main UK banks but, buried in the small print on HMRC’s website, it was confirmed that any UK resident individual or business could have used the ODF.

The ODF applied to ALL tax irregularities, even onshore ones, yet it had the title of OFFSHORE disclosure facility – we will never know how many people with onshore tax arrears might have come forward had they known that they could use the facility and benefit from the 10% penalty rate.

Cassidy says, “This time round HMRC must invest in a comprehensive publicity campaign in the national media and must also promote the new disclosure opportunity in foreign language newspapers and other media serving foreign nationals living in the UK. Some non-domiciled individuals may benefit from using the NDO and need to be told it applies to them.”
 
Under the new disclosure opportunity, HMRC will allow individuals who did not previously have the opportunity of using the ODF to disclose tax arrears and only suffer penalties at a rate of 10%.

 

 

Also open to onshore individuals


Cassidy comments, “As everyone resident in the UK in 2007 could in theory have used the ODF, this means that either the 10% penalty rate will apply only to individuals who have arrived in the UK since 2007 or, HMRC is saying that only those individuals that it approached directly are to be treated as having had the chance to use the ODF. Assuming that the latter is the case, HMRC must now accept that it did not publicise the ODF properly.”
 
“The NDO will be a good deal for both individuals, allowing them to come clean relatively cheaply, and for HMRC, allowing it to collect tax arrears for relatively little effort. But as HMRC says it has no plans for a further amnesty or disclosure facility it must get this one right. That means publicising it in the right places at the right time to ensure that it becomes part of the public consciousness for at least a short time."

 
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