New disclosure opportunity

HM Revenue & Customs has now published its guidance for the NDO.  The guidance, faq and forms can be sourced from the Revenue's website here or downloaded here in a bumper fun pack.

For those famiiar with the 2007 Offshore Disclosure Facility, the NDO will be nothing new.  Aside from the longer timeframe for reporting, which must be welcomed, the only difference is that agents are now recognised as being able to deal with the Revenue on behalf of their clients.

When it comes to notifying the intention to disclose, whilst it will be expedient for professional agents to be able to make the notification directly, some caution might need to be exercised here.  In an environment where the Revenue are known regularly to go out of their way to make life difficult for agents, one might have cause to be sceptical.  In this regard, one has to wonder what might happen when, as with the ODF, clients decide not to follow through with their notifications.  There were thousands of such taxpayers with the ODF, who made a notification but then got cold feet.  If the same happens again, are the Revenue going to be landing on agents who have made notifications which are not then followed up with disclosures ?  

There is also the facility for professional agents to make the actual disclosures.  Whilst, in certain refined circumstances, this may prove useful, it will necessitate some well drawn paperwork to be entered into with clients and, all told, it will probably be advisable to leave the clients to make their own disclosures once the agent has done their work.

Notifications can be made from 1 September to 30 November (via paper or telephone), from 1 September to 30 September (via webmail), and from 1 October to 30 November (via online). 

Subsequent disclosures can be made between 1 September and 31 January 2010 (via paper) and between 1 October and 12 March 2010 (via online). 

In a disappointing, but not wholly unexpected, step, it has been confirmed that the NDO cannot be used by those recalcitrant taxpayers who have onshore liabilities, but a standard form voluntary disclosure can still be made (page 6 of the guidance refers). Whilst the Revenue will not commit to a 10% penalty weighting in such circumstances, it should, nevertheless, still be possible to hold out for 10% in the vast majority of cases.

Elsewhere, we also now have the Liechtenstein Disclosure Facility.  The LDF comes with a markedly different framework, including a basic 10 year limitation period, a 40% cap on the tax  payable and immunity from criminal prosecution (but only to the extent that tax evasion is involved). 

Whilst there is pub talk over the apparent wheeze of deliberately invoking the LDF to get a better deal than is attainable under the NDO, scrutiny of the  currently available information suggests that a detailed comparative exercise is unlikely to prove as straightforward as some commentators would have us believe. 

With the NDO being a known quantity and the LDF still lacking in detail, the NDO is likely to be the default route of disclosure in the majority of instances.  In the more complex scenarios,  involving  transgressions of more than 10 years standing or false declarations having previously been made to the Revenue, there could be merit in holding fire on a decision until the end of November whilst we see whether more flesh has then been put on the LDF.  However, with the LDF having a much longer shelf life, it is perhaps unlikely that much more will be known within only another 3 months.