New Disclosure Opportunity (NDO)
PLEASE NOTE: This disclosure opportunity ended on 12 March 2010. The information is still available below and there are other facilities available, contact us to find out more.
HMRC have now provided guidance on the format and operation of the forthcoming NDO.
In summary, the NDO will allow individuals, businesses or Trusts with undisclosed offshore income or gains to declare the duties unpaid to HMRC within a narrow period of time, with a guaranteed fixed penalty.
Useful Downloads: HMRC - Making a Disclosure, HMRC - The Forms, HMRC - FAQs, HMRC - NDO
Key points to be aware of:
- The NDO can only be used by those with offshore income or gains to disclose. If the offshore interest is in Liechtenstein the associated Liechtenstein disclosure facility should be used. The more complex disclosures should also consider a direct approach to HMRC.
- On 1 September 2009 a Disclosure Reference Number (DRN) can be obtained via a paper request to HMRC and then from 1 October 2009 via an online notification system.
- The window to obtain a DRN closes on 4 January 2010. Read more on the deadline extension.
- The DRN can be obtained by a tax agent acting for an individual or business.
- The disclosure will have to be submitted on or before 31 January 2010 for paper disclosures and 12 March 2010 for electronic disclosures, along with full payment of the duties, interest and penalty arising.
- The disclosure must be a full disclosure of all unpaid liabilities for up to the last 20 years.
- In the case of Inheritance tax, the HMRC guidance suggests that disclosures should cover a period beyond the 20 years.
- If time to pay the liabilities arising is needed, then discussions must be entered into with HMRC, before the disclosure is submitted.
- Whilst there is no immunity from prosecution, where a full, complete and accurate disclosure is made HMRC say that a civil settlement is the preferred route for them to pursue.
- Materially incomplete disclosures will also be considered for criminal prosecution so care must be taken in any disclosure made.
- Cases with underlying criminal activity will be considered for prosecution, including offences like drug trafficking and terrorism.
- The disclosure forms will be much the same as the ODF with additional IHT issues to be incorporated.
- The penalty for the duties disclosed in the NDO will be fixed at 10%, except for those who received a letter from HMRC during the ODF. They will have penalties fixed at 20%.
- This is the last chance for those with undisclosed income and gains offshore to come forward voluntarily. HMRC intend to pursue those who do not disclose and charge a minimum penalty of 30%.
- HMRC will notify acceptance of ‘low risk’ cases within 4 months of the closure of the NDO. Cases not perceived as ‘low risk’ cases will remain open indefinitely until HMRC have risk assessed them. (HMRC have not defined ‘low risk’)
- HMRC have now successfully issued 308 information notices to banks in the UK which will allow them to obtain details of offshore bank accounts held by individuals, trusts and businesss with a UK address linked to that offshore account.
Issues arising from the NDO:
Firstly, is the open ended way HMRC intend to deal with the “non - low risk’ disclosures. Those wishing to seek earlier closure may want to consider other options available to them. We will be happy to advise on this.
Secondly, HMRC’s prosecution policy is wide ranging and anyone who failed to disclose their offshore account or any other tax offence during a previous enquiry should make any new disclosure with extreme care and professional help. Likewise anyone who is considered “high profile” or to be in a position of trust or responsibility will also have to have the right strategy for coming forward.
Thirdly, it is crucial that the right preparatory work is undertaken before any disclosure is made to ensure that not only is it accurate but that it can also be defended, if it should be subject to review. Any failures could mean a significant increase in the level of penalties.
Finally, it is essential that full consideration of the circumstances of each case is undertaken to ensure that here is no possibility of taking advantage of the Liechtenstein Disclosure Facility which allows for a shorter period of disclosure.
How can we help?
Here at BTG Tax we will listen to your situation and advise on the best course of action. What is clear is that there is no hiding place for those with undeclared income and gains offshore and they need to act now.
Please contact one of our tax investigation specialists on 0845 678 2903 quoting reference “NDO” to discuss, in confidence, how we can provide a solution for your particular situation.
Alternatively, to contact us directly through the website, please click here and we will get back to you promptly.
Key NDO contacts:
Leo Coyle for Northern Ireland, Andrew McKenna for Scotland and the North, Sue Bradshaw for London and the South, Jeff Millington for the Midlands.
We will update this page as the NDO develops so please return for the latest news.