HM Revenue & Customs (HMRC) have just announced details of a second and positively last opportunity for individuals and companies who have unpaid tax connected with an offshore bank account or investment to come forward and make a clean breast of their irregularities. Commonly, and possibly mistakenly, referred to as a tax ‘amnesty’ the New Disclosure Opportunity (NDO) was first mooted by the Chancellor in this year’s Budget speech and can be viewed in two lights. Firstly it is quite simply a massive revenue gathering exercise which could yield a billion pounds or more at a time when the public purse is severely over-stretched. The first such amnesty in 2007 –the Offshore Disclosure Facility (ODF) – yielded £400 million in tax interest and penalties principally from the customers of the five or so large retail banks. The NDO is aimed at those involved in complex offshore structures and customers of the several hundred smaller, but highly lucrative, banks trading in the UK which also have an offshore presence very often in a perceived tax-haven. In this context the NDO can also be viewed as part of the UK’s contribution to the ongoing internationally co-ordinated exercise by the Organisation for Economic Cooperation and Development to clamp down on the abuse of tax havens to facilitate tax evasion.

The hedge fund industry has recently been under fairly intense scrutiny by HMRC and many will view this latest move by HMRC as merely an extension of that process. Managers whose personal and/or business affairs are linked to offshore structures, or who have accounts offshore, need to be aware that the investigative landscape has changed considerably. Many so-called tax havens have signed or are about to sign Tax Information Exchange Agreements with the UK. The Isle of Man has said that from 1st July 2010 it will automatically exchange bank information with EU member states. And HMRC are in the process of serving information notices on several hundred UK banks which have an offshore presence. It is highly likely therefore that in a relatively short time HMRC investigators will have available to them a substantial amount of information for use in current and future investigations.

In terms of the NDO, the scope and rules governing the application of this are very similar to those associated with the ODF.

• The NDO began on 1st September 2009 and ends on 12th March 2010, in time for the yield there from to be included in the results for the current fiscal year.
• Those who wish to make a disclosure under the NDO must notify HMRC – by telephone or in writing – of their intention to do so between 1st September and 30th November 2009. Failure to make such a notification within this fairly narrow time-frame means that they cannot then take advantage of the favourable terms of the NDO.