ODF - one size does not fit all

With three weeks having passed since the announcement of the Offshore Disclosure Facility, and with dozens of conversations held in the interim, we feel that the facility should be used only by those non compliant taxpayers whose transgressions are simple to quantify and who can be confident that the facility will, indeed, be granted to them by next April.

For others, whose affairs may be more complex, both in terms of the technical nature of the transgressions and the work necessitated to quantify the financial settlement, a traditional, ad hoc voluntary disclosure to the Revenue would seem far better suited. 

This route affords more time to collect documents and to work on the numbers, and to find the resources to pay the financial settlement. The Revenue can be expected to extend the taxpayer the benefit of the general spirit of the "amnesty", although not necessarily the penalty deal, and the taxpayer and his adviser can maintain more control over the entirety of the disclosure and settlement process.

Importantly, with an ad hoc disclosure, the taxpayer can expect to gain certainty over the treatment of thier disclosure when compared to the OFD route in which the Revenue has reserved the right to not to be bound by the terms of the facility. Whilst, in the vast majority of cases, taxpayers will get the deal offered, there will doudtless be some who are in for a nasty surprise when, having already made a disclosure and paid the financial settlement, they find the Revenue denying them the deal.

With there being no precedent for the OFD in UK tax history, it is not possible to determine the precise criteria which the Revenue might apply to deny taxpayers the terms of the OFD but we suspect that the Revenue will be paying close attention to the original source of capital monies parked offshore by taxpayers, particularly where those monies were originally extracted illicitly from UK businesses, e.g., through sham invoices ostensibly raised by a tax haven based company owned by the taxpayer or his family.