Tax Disclosure – Watch Out!


Although HM Revenue and Customs (HMRC) recently extended (until 4 January 2010) the ‘disclosure window’ to allow previously undeclared foreign income to be declared, clients seeking to use the festive season to make a disclosure might like to consider the following, which apply to disclosures made under the disclosure window:
  1. In order to qualify for the reduced penalty of 10 per cent which is on offer for those making disclosures,HMRC must ‘accept’ the disclosure. This seems to mean that they can treat a disclosure as not being one which qualifies for beneficial treatment if they believe that the original tax return was materially incorrect or incomplete;
  1. The 10 per cent penalty will not be available where the taxpayer was written to by HMRC with regard to their previous offshore income disclosure ‘amnesty’ in 2007;
  1. A taxpayer wishing to rely on the disclosure facility must disclose all undeclared tax liabilities over the last 20 years; and
  1. The offer is limited to undisclosed tax liabilities only – it will not apply with regard to other offences (e.g. regulatory infractions), disclosure of which may result in information being passed to other governmental bodies for enforcement action to be taken.
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