Following the closure of the Liechtenstein Disclosure Facility (LDF) at the end of 2015, those wishing to regularise offshore tax issues may have been eagerly awaiting an announcement from HMRC of the anticipated 'last chance' opportunity to put things right. The introduction of the new facility, which the chancellor promised last year, had been widely predicted for the start of the tax year, with details of the arrangements to be publicised a month or so in advance.
Those arrangements are expected to involve a minimum financial penalty of 30 per cent of the under-declared tax and – unlike the LDF – no guarantee of criminal immunity. The new facility will however provide a final chance to come clean on offshore matters, before further more stringent powers are introduced, including enhanced civil penalties and the much-heralded strict criminal liability offence for offshore tax evasion.
But so far nothing further by way of announcement has been made by HMRC. So why the delay? One reason may be the distraction of the Panama Papers revelations which might have caused a general re-think as to the design and content of the new facility. Another consideration for HMRC may be whether the new facility should be extended to embrace those with UK tax issues as well as those arising offshore. A further and more likely reason could be HMRC’s desire to design an easy-to-use digital disclosure route under which those with offshore tax issues can simply and effectively self-assess their irregularities online.
But would such a digital approach do the trick, particularly with the more complex situations potentially encountered by wealthy individuals who wish to come forward? It goes without saying that HMRC must ensure that the correct amount of tax is established and settled as quickly as possible in all cases. Surely then HMRC needs, in the more difficult cases, a human interface to assist those who want to put things right – much like the LDF under which HMRC offered up a named inspector to assist in the smooth running of disclosure cases?
If you would like any more information on this issue please get in touch with Mike Down or your usual RSM contact.