The 10,000 responses submitted to HMRC under the New Disclosure Opportunity (NDO) which shut on Thursday 4 January is disappointingly low, say leading tax experts.
HMRC had initially estimated it would receive up to 50,000 disclosures, bringing in some £500m in unpaid taxes, 5,000 more than it received during 2007’s Offshore Disclosure Facility which raised over £400m.
However, despite this initial estimate, the total number of disclosures received is substantially less, leading some tax advisers to criticise HMRC for not successfully publicising the opportunity to offshore investors.
“HMRC must be disappointed with the result of this latest amnesty,” said Mike Down, tax investigations partner at Baker Tilly.
“The main reason they received such a low response rate has got to be because they did not advertise it enough. Other than a few adverts in the Sunday papers when it first opened and a few more in the run up to its close there really was not enough done to raise awareness.”
Andrew Watt, managing director, tax disputes and investigations for accountancy firm Alvarez & Marsal Taxand, said: “The number of respondents will be maddeningly disappointing for the revenue and it will be seen by many as a bit of a damp squib.
“Indicative of the revenue’s concerns was its extension of the deadline from the end of November to 4 January, which I believe was just a face saving device.
“It could be argued the take-up was simply due to a lack of publicity but there is also the possibility many investors still do not see the revenue as a big threat and are willing to take their chances. In either case there could be a big shock in store for some.”
BDO partner, Fiona Fernie, said it is also likely many eligible investors will use the Lichtenstein Disclosure Facility (LDF), which offers more favourable terms than the NDO.
“Fewer people have come forward this time than they did with the ODF but this is not surprising given people have the option of disclosing under the LDF,” she said.
“The true outcome of this latest disclosure will depend on the combination of responses for both.”
While announcing the total number of respondents to the NDO, HMRC’s permanent secretary for tax, David Hartnett, warned it would also be looking into intermediary involvement in setting up offshore accounts on which there was unpaid tax.
However, tax advisers say successfully prosecuting offending intermediaries could be very difficult.
“It will be very hard for HMRC to determine the length of involvement of intermediaries but if they are able to prove anything I believe they will go in quite strongly as a warning to others not to undertake this type of work for their clients,” said Fernie.
