NDO: Frequently Asked Questions
PLEASE NOTE THAT THE CLOSING DATE FOR THIS OPPORTUNITY HAS NOW PASSED
Q. What is the New Disclosure Opportunity?
A. It is an opportunity for people who have not paid the right amount of tax to do so without (in nearly every case) any HMRC investigation and with a smaller penalty than might otherwise arise.
Q. How long does the New Disclosure Opportunity last?
A. It opened on 1 September 2009 and will close by 12 March 2010 for on line disclosures and by 31 January 2010 for paper disclosures.
Q. Does HMRC know about my offshore bank account or investment?
A. There is a good chance that it does or it will do. HMRC has a vast amount of data from the five High Street Banks and recently received more information from four more banks. In August 2009 HMRC also received permission to approach a further 308 banks and financial institutions.
Q. What kind of information will HMRC have about my offshore account?
A. It is thought that HMRC has account balances and interest earned for many years and pages from accounts for some years. They may also have access to correspondence.
Q. My offshore account is nothing to do with tax evasion. What should I do?
A. Many offshore accounts will indeed have nothing to do with tax evasion. People may have declared the interest arising, there may be no interest at all, the capital may have come from an inheritance, a gift or taxed sources, the owner may be non-domiciled in the UK and has not remitted any income arising. But it would be wise to take professional advice.
Q. How many years of tax will HMRC want to recover?
A. 21
Q. Will interest be due on that tax?
A. Yes
Q. Will HMRC require a penalty and if so how much?
A. HMRC will want a penalty. The penalty will be 10% of the unpaid tax if you did not have a previous chance to disclose unless £1,000 or less of tax is involved when there is no penalty. It will be 20% if HMRC wrote to you in 2007 and you could have disclosed under the 2007 disclosure facility. After an HMRC investigation the penalty would probably be greater.
Q. Why should I take part in the New Disclosure Opportunity?
A. HMRC has stated that this is the last chance for people to come forward. Those who do not will, HMRC say, be “pursued relentlessly”. Sorting out one’s tax affairs in this relatively low key way will give certainty for the future, very probably avoid any risk of criminal prosecution, probably avoid a detailed HMRC investigation- which can be expensive in time, compliance costs and professional fees- and allow access to a reduced penalty.
Q. Is there any guarantee there will be no criminal prosecution?
A. HMRC will not give an absolute guarantee. However, HMRC say “with the exception of cases where we believe the subject of the disclosure is the proceeds of serious organised crime, a complete and unprompted disclosure will generally suggest that a civil course of action is appropriate.”
It is of course essential that any disclosure made now is correct and complete. Specialist professional advice is also essential.
HMRC also say that a person can make a disclosure under its normal Civil Investigation of Fraud (CIF) procedures. If CIF is offered to someone it comes with a guarantee of no prosecution if the disclosure is correct and complete. But the NDO approach is not available to someone who wants to use CIF.
Q. Will I be investigated if I make a disclosure?
A. HMRC will not give an absolute guarantee that you will not. But it is very unlikely. Last time 45,000 people came forward and nearly all disclosures were accepted. Specialist professional advice may be necessary. However, it is essential that any disclosure made now is correct and complete.
Q. I could have come forward last time but didn’t. Where do I stand?
A. This opportunity is available for you although the penalty will be 20% of the tax and NIC.
Q. I have been investigated by HMRC before but I didn’t tell them about this account. Can I use the NDO?
A. Yes. But it is very important that you seek advice from a tax investigations specialist on your circumstances.
Q. I have other tax problems to disclose to HMRC. Can they be included?
A. Yes. So long as there is a loss of UK tax related to an offshore account or asset, then other tax underpayments can be included in the NDO. If there is no overseas element the NDO is not available. But any underpayment of UK tax should be disclosed to HMRC and it would be wise to take professional advice.
Q. My bank account is in Liechtenstein. Does that make a difference?
A. Yes. You may be able to take advantage of the more favourable Liechtenstein Disclosure Facility. If it applies HMRC may only seek ten years of tax.
Q. What steps must I take to take part in the NDO?
A. First you had to register under the NDO by 4 January 2010. Then you need to gather all the information to make the disclosure and then make the disclosure and payment, if on paper by 31 January 2010 or on line by 12 March 2010.
Q. Can I use an agent to disclose on my behalf?
A. Yes.
Please call Iain Macleod on 07920 146800 for a free confidential discussion or email imacleod@edftax.co.uk
