HMRC has published guidance confirming that the deadline for making disclosures under the four main offshore disclosure facilities currently in operation will now be 31 December 2015, three months earlier than planned, in line with the announcement made at the Budget in March
The Liechtenstein Disclosure Facility (LDF), along with those in operation in the Isle of Man, Guernsey and Jersey, were originally scheduled to run until April 2016, but will now close at the end of the year.
Since its introduction in September 2009, HMRC’s figures show 6,650 individuals have registered under the LDF and there have been 6,106 disclosures. The total yield to date is just over £1.15bn, well under the £3bn predicted in 2012 by Dave Hartnett, who was then permanent secretary to the Treasury.
HMRC’s data shows the bulk of the LDF settlements (3,961) are for under £100,000. This summer there have been two more settlements at the top of the range, bringing the total of settlements over £5m to 16.
In addition, 154 individuals have paid between £1m and £5m, and 1,632 between £100,000 and £1m. The average settlement figure to date is £174,000.
The numbers of people making disclosures under the other facilities are considerably lower. There have been 232 registrations and 181 disclosures under the Jersey Disclosure Facility (JDF) which has so far brought in £2.2m from 131 settlements.
The Guernsey Disclosure Facility (GDF) has recorded 56 registrations, with 37 disclosures received and £700,000 in settlements. The Isle of Man Disclosure Facility (IOMDF) figures are 232 registrations, 186 disclosures received, and £3.7m brought in from 149 settlements.
Tessa Lorimer, special counsel at law firm Withers, said: ‘The UK is closing the LDF as access to coercive new criminal powers will shortly supersede the need for it. Although a new disclosure facility will be introduced in 2016, I am certain that its conditions will be much stricter than the LDF's and would urge anyone with undisclosed offshore assets to make use of the LDF before it closes.
'Allowing time to go through the disclosure process means that people should register as soon as possible.’
Karen Clark, partner at Baker Tilly, said the early closure of the LDF would seem to be in keeping with the growing public and media hostility to tax evasion, and agreed that the one final limited disclosure facility announced to run between 2016 and mid-2017 ahead of the introduction of the Common Reporting Standard (CRS) is likely to have terms which were ‘significantly less beneficial’ than the LDF.
Baker Tilly says that in 2017 once HMRC starts to receive information under UK FACTA or the CRS, no further disclosure facilities are likely to be offered and the liabilities arising from settlements with HMRC could mean that the non-compliant risk losing not only all of their offshore assets but potentially more once penalties are taken into account.
HMRC is set to receive large amounts of data from over 90 countries including all EU countries and Switzerland under the various exchanges of information agreements from 2016 onwards and will be able to use that data to launch investigations into the tax affairs of individuals.
Clark said: ‘From HMRC’s perspective, the non-compliant have had plenty of time to regularise their affairs under LDF so they are unlikely to show any leniency to those who still fail to do so. We can expect
HMRC to be looking, inter alia, at undisclosed distributions to UK beneficiaries from offshore trusts, 10 year charges for trusts which have not been reported, and into the residence and domicile status of individuals.’
HMRC guidance on the LDF is here
Guidance on the IOMDF is here
Guidance on GDF is here
Guidance on JDF is ere
Sign up to our newsletter
If you would like to receive regular news alerts about breaking news and developments in tax, accounting and audit, sign up to receive our free newsletter here