Tax amnesty 2009 – new disclosure opportunity

The New Disclosure Opportunity is an initiative from HMRC to enable UK taxpayers to clean up their historic tax irregularities by first registering for the scheme and then going on to make a full disclosure; in return for a reduced penalty of only 10%.  It’s only available to people with offshore bank accounts or assets “related” to the tax underpaid. A similar informal scheme will operate for “onshore” disclosures.

1. The NDO covers all taxes: e.g.  Income and Corporation Tax, VAT, CGT, IHT.
2. “Notification of Intention to Disclose” has to be made between 1/9/09- 30/11/09 (this can be done online from 1 October); to receive a “Disclosure Reference Number”.
3. You then have to make a Full Disclosure and payment in full within the disclosure windows: 1/9/09- 31/1/2010 for hard copies; 1/10/09- 12/3/2010 online.
4. Agents can make the Disclosure for you but you have to confirm its accuracy.
5. The Disclosure has to cover all relevant years, up to a maximum of 20 years.
6. Accepted Disclosures will get a fixed penalty of 10%. But if you received a letter from HMRC as part of the Offshore Disclosure Facility the penalty will be 20%.
7. No penalties are charged where the tax liability is less than £1,000.
8. Full payment of all tax, interest and penalties must be made with the Disclosure.
9. People who don’t disclose now and are then found to have tax liabilities relating to offshore assets/accounts can expect penalties of 30% -100% and run the risk of criminal prosecution.

The NDO process is straightforward in simple cases.  But there are many pitfalls for the unwary or those with more complex tax affairs.  Badly managed Disclosures can have the reverse effect; leading to higher penalties and even prosecution.