Tax & Accounting News

New Disclosure Opportunity Penalties

04/08/2009

The level of penalty for UK firms and individuals declaring unpaid tax under the New Disclosure Opportunity (NDO), which begins this autumn, has been set at 10%. This is significantly less than the penalty would normally be in such circumstances, and has clearly been designed to encourage taxpayers to come forward.

Although much recent publicity has surrounded the use of offshore accounts to avoid tax, it should be remembered that the NDO does not just apply in these circumstances, and can in fact be used for any type of disclosure.

Anyone who chooses not to take advantage of this opportunity, and is subsequently found to have undeclared tax liabilities, is likely to face a penalty of at least 30%, as well as running an increased risk of criminal prosecution.

It should also be noted that the 10 per cent rate does not apply to customers of HSBC, HBOS, Lloyds, RBS or Barclays, who were offered the chance to make a disclosure under the 2007 Offshore Disclosure Facility (ODF). They will now be able to make a disclosure with a penalty of 20%, which is more favourable than normal, while at the same time demonstrating that special rates are unlikely to be repeated.

Martina Fitzgerald, head of tax at Harris Lipman, said: “The government has stated that this will be the last opportunity of its kind, so anyone who has undisclosed funds in offshore accounts should disclose this income now, to minimise costs.”

To take advantage of the NDO, a notification of intention to disclose must be made to HMRC between 1 September and 30 November this year, for those notifying on paper, or between 1 October and 30 November for those notifying online. Disclosures can then be made on paper from 1 September 2009 to 31 January 2010, or electronically from 1 October 2009 to 12 March 2010.

For further information or advice about making tax disclosures under the NDO, please contact us.

 

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