Did you disclose?

You may well have read about HMRC’s offshore disclosure facility. HMRC obtained details of around 400,000 offshore bank accounts from some of the larger banks. Many of these had not been declared and so HMRC introduced a ‘special offer’.

By 22 June 2007 a taxpayer could register their intention to ‘confess all’ to HMRC, with a full report, and only a 10% penalty on any under-declarations, to be submitted to HMRC later this year.

But what will happen to those who did not register in time?

HMRC say that they will actively pursue those who did not make a disclosure and for whom they hold details. Penalties could be up to 100% of the tax not declared and HMRC have stated that any future penalty is unlikely to be less than 30%.

HMRC will soon start to open enquiries into those taxpayers about whom they have relevant information from the banks. It is still possible to make a disclosure to HMRC, generally via a local tax office, and it is likely that any penalty would be reduced if a disclosure was made, particularly if it was made before HMRC started any enquiry.

It is particularly important to bear in mind the following principles:

• you should correct any understatements in your tax affairs whenever you discover them
• it is better to disclose voluntarily, as this reduces the penalty
• it may be possible to negotiate a 10% penalty in any case but it is likely that specialist help would be required.

If you would like to know more about dealing with HMRC please contact us.