HMRC Disclosure Facilities

In the past few years HMRC have launched a number of Disclosure Facilities to enable taxpayers to disclose any undeclared income. These typically take the form of Offshore Disclosure Facilities or Disclosure Facilities which target specific sectors in the UK, for example doctors, lawyers, plumbers and property owners. One of the most well known is the Liechtenstein Disclosure Facility which was introduced on 1 September 2009 following the release of information to HMRC about a large number of UK taxpayers with undisclosed accounts in Liechtenstein.

The latest offshore facilities to be announced by HMRC are:

  • The Isle of Man Disclosure Facility
  • The Jersey Disclosure Facility
  • The Guernsey Disclosure Facility

Some of the key characteristics of these new offshore facilities are:

  • They commenced on 1 April 2013 and end on 30 September 2016;
  • Registration for the facility is necessary;
  • Liabilities are generally calculated from 1 April 1999 (HMRC can go back 20 years in the case of tax fraud or tax evasion);
  • All undeclared income and gains must be disclosed;
  • It is necessary to hold an asset in the relevant jurisdiction;
  • The penalty (which is a percentage of the tax due) will be significantly less than if HMRC investigate the tax evasion;
  • Disclosure must be made within 6 months of HMRC accepting the registration to take part in the offshore disclosure opportunity.

A decision to make a disclosure to HMRC must be carefully handled and with a knowledge of how the different disclosure agreements work, and which one best suits the needs of the taxpayer making the disclosure. As part of this process, taxpayers must also be aware that HMRC will be looking to levy substantial penalties for non-disclosure of the tax. Protecting the taxpayer’s interests in this situation involves mitigating penalties and raising any legitimate tax technical arguments to reduce the tax payable following any disclosure.

Levy & Levy have enormous experience in all areas of HMRC disclosure work and can help steer our clients through the complexities of this area towards a successful resolution.