The latest Offshore Disclosure Facility (“ODF”) has recently been signed up with the Isle of Man, and this now sits alongside similar agreements with Jersey, Guernsey and Liechtenstein.
These all provide “eligible customers” (the rather odd term that HMRC use to refer to taxpayers) with a means of “coming clean” with HMRC and effectively bringing their tax affairs up to date by way of a full disclosure of any outstanding liabilities.
The three crown dependant agreements run until September 2016, after which there will be a full exchange of information. This broadly gives taxpayers a three year period within which to make full disclosures to HMRC and benefit from much lower penalties.
Cayman Islands are also in negotiation with a view to a similar arrangement and no doubt further discussions will be opened with other jurisdictions in line with HMRC’s comments in last months Budget.
What is clear is that those individuals with undisclosed liabilities really need to take the initiative and seriously consider making the appropriate disclosure to HMRC now, before the game is up and HMRC receive information from the appropriate jurisdiction.
With the well publicised increased investment in HMRC resource and the increasing use of more accurate data mining tools, the net is most definitely closing on those with hidden assets – internet searches, Companies House records and Local Authority information are just a few of the methods used.
HMRC could even receive information from a 3rd party such as the reported list of 24,000 accounts that were operated by HSBC’s private bank in Switzerland – it was widely reported that this information was initially sold to the french tax authorities who recovered 500m euros in unpaid taxes, who in turn released the relevant information to HMRC under the Tax Information Exchange Agreement. In a similar incident, it was also publicised that the German tax authorities paid 2.5m euros for a disc containing information on Credit Suisse accounts held in Switzerland.
There is no one fits all solution for any particular taxpayer. Not every ODF is available to every taxpayer and likewise certain individuals could potentially disclose under more than ODF.
One thing is for certain, the myth of complete anonymity is beginning to fall like the proverbial domino….