The Financial Secretary confirmed that HMRC will be giving offshore account holders a new disclosure opportunity in 2009. The proposal for a new disclosure was announced at the “Fight Against International Tax Evasion Conference in Paris” last month which was covered in the November 2008 issue of tax.point.

In a briefing paper prepared by HMRC for the main professional associations, among which ICAI is now always included, it was confirmed that the objective will be to obtain information from a new tranche of financial institutions, using the same legal powers as applied to the first 5 banks. We gather that the intention of the new exercise will be to provide an opportunity for account holders to inform HMRC of their own accord, if they have unpaid tax or duties and to settle their debts in a similar way to the original offshore disclosure facility.

Following rulings against a number of major financial institutions, HMRC obtained details of approximately 400,000 offshore bank accounts belonging to people with UK addresses. HMRC tell us they believe the 400,000 accounts relate to 260,000 individuals and estimate that up to 25% of these individuals had not included income and/or interest from these accounts on their returns.

In April 2007, HMRC launched the “Offshore Disclosure Facility”, enabling investors with offshore accounts to disclose tax due on income and gains not previously included in their returns. 62,000 investors came forward in the initial registration stage, which closed on 22 June 2007. Around 45,000 of these came forward to disclose and pay by the 26 November 2007 deadline.

HMRC have advised us that it is now pursuing those with offshore accounts who did not come forward under the arrangements “where there is a risk that the full amount has not been declared”. In the most serious cases, criminal investigation may follow. The scheme has so far recovered around £400m in unpaid revenue. The cost to the Exchequer of running the scheme has been approximately £6.5m.