Tax Disputes & Investigations
New Disclosure Opportunity (NDO)
New Disclosure Opportunity (NDO)In 2007, HM Revenue & Customs (HMRC) launched its 'Disclosure Campaign' and introduced the Offshore Disclosure Facility (ODF). This announcement followed HMRC winning landmark rulings allowing it to obtain information from five major 'high-street' banks relating to offshore bank accounts held by individuals living in the UK. The ODF was the first HMRC campaign designed to allow taxpayers who directly or indirectly held (or had held) offshore accounts and who owed UK tax thereon to disclose them to HMRC and settle their outstanding tax liabilities (plus interest) with a guaranteed 10% fixed penalty. In 2008-09, HMRC turned its attention to obtaining similar offshore bank account information from a further 300 banks and financial institutions in the UK. To coincide with this action, on 1 September 2009 HMRC launched the 'New Disclosure Opportunity' (NDO). This allowed taxpayers with an offshore account or asset a final opportunity to come forward and settle their affairs with HMRC in return for a reduced financial penalty. Penalties were capped at 10% for taxpayers who were not contacted by HMRC during the ODF and 20% for those that were, but who chose not to come forward. HMRC stated that it would not offer such preferential terms to offshore account and asset holders again. Dave Hartnett, HMRC's Permanent Secretary for Tax, said at the time "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." Like the ODF, the NDO was fast track campaign aimed at collecting as much unpaid tax as quickly as possible. Unlike the ODF, however, the NDO allowed taxpayers to notify their intention to disclose and then make their disclosure online as well as in paper form. Under the NDO, the taxpayer had to notify HMRC of their intention to disclose by 30 November 2009. The notification did not commit the taxpayer to subsequently making a disclosure, but if this deadline was missed the taxpayer could not take part in the NDO. The taxpayer was then required to make a full disclosure of all outstanding liabilities and pay these plus interest and the appropriate fixed penalty by either 31 January 2010 (for paper disclosures) or 12 March 2010 (for online disclosures). As part of the disclosure, the taxpayer had to enter into a formal settlement contract with HMRC, sign a declaration that the disclosure was correct and complete and provide a list of their offshore assets and bank accounts (as at 5 April 2008). Unlike the ODF, the NDO made no mention of a date whereby HMRC had to either accept or reject the disclosure. Contrary to a number of reports, the NDO was not a 'tax amnesty'. It was not intended to allow taxpayers to escape paying tax liabilities that were legally due nor did it provide immunity from prosecution to those that came forward. So what results did the NDO produce:
Once the NDO closed, HMRC began using the data obtained from the banks to check the accuracy of the disclosures made and identify taxpayers who had failed to come forward. We understand that HMRC has subsequently opened 2,000 (approx) formal investigations where prosecution was not considered appropriate and is expecting to open thousands more during 2011 (and possibly beyond). As part of its Offshore Campaign, HMRC has also commenced a number of criminal investigations with a view to prosecuting taxpayers for tax evasion linked to offshore accounts and/or assets. Although participation in the NDO is now no longer possible, anyone with undeclared tax liabilities, whether they arise offshore or in the UK, is still strongly advised to make a disclosure to HMRC. By approaching HMRC (rather than risking HMRC initiating an investigation), taxpayers can help reduce the potential financial penalties that could be charged and best protect themselves from potential prosecution. If you know or suspect that you need to disclose undeclared income, profits and/or gains to HMRC, whether they arise in the UK or offshore, you should seek specialist advice before doing so. The management of the disclosure process and the way in which the relevant facts are presented to HMRC are key to achieving maximum penalty mitigation and protecting you from further enquiry by HMRC. In addition, you can also protect yourself from being 'named and shamed' by HMRC as part of its 'Publishing the Names of Deliberate Defaulters' programme. How can OneETDI help? Whilst we endeavour to provide informative and accurate information, the content on this site is for general information purposes only and should not be taken to constitute tax or legal advice which must always be tailored to individual circumstances. Please contact us if you would like to discuss matters. [Top] |
