Tax amnesties get off to a slow start

The take up of HM Revenue and Custom’s two new tax amnesties has got off to a slow start, according to new data obtained by law firm McGrigors.

Just 27 taxpayers have registered with HMRC since the Liechtenstein Disclosure facility was opened on September 1.

It is not known how many people have signed up to the New Disclosure Opportunity, however, because HMRC has refused a separate Freedom of Information Act request to disclose details on how many taxpayers have come forward on the basis that disclosing the data may “undermine the facility itself”.

Phil Berwick, director of tax Investigations at McGrigors, said: “HMRC may be concerned that if it seems that not many people have come forward under the NDO this may dissuade others from doing so.”

For those UK individuals who have not come forward about money held offshore time is running out, as the notification period for the NDO expires on 30 November 2009.

Although the LDF runs until 2015, McGrigors says that qualifying taxpayers should also register for this process as soon as possible. This is because if HMRC discovers offshore accounts through their other compliance work before the taxpayer has come forward they will not benefit from the favourable terms on offer.

“Taxpayers should be taking advantage of these amnesties as quickly as they can,” said Jason Collins, partner at McGrigors. “Putting off notifying HMRC until the last possible moment could potentially be a very dangerous strategy and would expose those taxpayers to unnecessary risks.”

However, Philip Marcovici, who was part of the negotiating team with the Liechtenstein government on the deal with HMRC and is a partner of Baker & McKenzie, said he was “not at all surprised to see only a small number of people registered to date”.

He added: “While there are certainly good reasons to register early, given the complicated technical issues surrounding the arrangements I expect to see a larger number of registrations happen over the coming years.”

HMRC has now started to send ”personal letters” to those offshore bank account holders which it suspects may have underpaid tax on those accounts.

Anyone that recieves one of these letters, even if it is in relation to the NDO, will no longer be elligible for the full benefit of the LDF amnesty either.

HMRC said it is working on details obtained from the use of their information powers.