Last chance to disclose offshore funds

The New Disclosure Opportunity (NDO) provides a second chance for disclosing unpaid tax on offshore accounts. To take advantage of the NDO, an initial intention to make a disclosure has to be officially notified to HMRC by 30 November.

The scheme will enable people to make voluntary disclosures to HMRC, for which a reduced penalty of 10% will apply to full disclosures, unless the accounts are held with Lloyds TSB, HSBC, HBOS, RBS or Barclays. These banks have already offered the chance to disclose unpaid tax under the 2007 Offshore Disclosure Facility (ODF) and the penalty will therefore be 20%.

Unfortunately, HMRC has surprised many by limiting this opportunity to those who have an offshore element to their disclosure. If you do not have offshore income, you will fall within the usual mechanism for disclosing previously undeclared income. However, for those who come clean on their overseas income now, the favourable penalty rates are available on UK income disclosures as well.

The timescale for using the NDO is very short. If you miss the 30 November deadline for registering an intention to make a disclosure, the NDO will not be available to you. Once registered, the disclosure, including full payment of the tax, interest and penalties, must be made by 31 January 2010 for a paper declaration and 12 March 2010 for online submissions. HMRC has indicated that there will be no more chances and anyone caught later will suffer a penalty of at least 30%.

If you have any concerns at all regarding your tax affairs, whether in the UK or offshore, please contact Morley and Scott as a matter of urgency. It may be that there is nothing to worry about, but if something is amiss now is the time to get it sorted out. Specialist advice in approaching HMRC is essential.

For further information please contact one of our tax specialists.