Offshore Disclosure Facility – Don’t miss the boat

In September 2016 HMRC opened their offshore disclosure facility as a final chance for anyone with undisclosed overseas income for the tax years prior to 2016/17, to come forward and bring their UK tax affairs up to date. The window to make a disclosure expires on 30 September 2018.

The risks of non-disclosure are higher than ever. HMRC has tipped the balance in their favour with regard to the prospect of identifying cases for investigation, particularly after the implementation of the Common Reporting Standards (CRS). They have also toughened the consequences of not disclosing.

With over 100 jurisdictions committed to data exchange in 2017 or 2018, HMRC will receive a vast quantity of new information from these offshore jurisdictions and will therefore rely less on voluntary disclosures from tax payers.

Disclosure is essential before HMRC opens civil investigations that will lead inevitably to higher penalties. For tax years 2017-18 onwards, new ‘strict liability’ rules mean that HMRC will no longer have to prove that a taxpayer intended not to disclose all of the tax due for them to deem it tax evasion.

Going forward the penalty could be up to 200% of the tax due, with a minimum penalty of 100%. There will also be possible additional penalties, depending on the amount of undeclared tax involved and the potential for criminal/or civil investigations and the taxpayer’s name listed on a public register.

It is therefore extremely important to be confident that your affairs are in order. If you are unsure whether you need to make a disclosure about anything, please contact a member of the tax department on 023 8046 1200.