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By Ben Stupples
The U.K. plans to publish data on its “final chance” disclosure program for tax evaders to come forward to the government, in a move that will shed light on the initiative’s success.
A spokesman for the U.K.’s tax authority, Her Majesty’s Revenue and Customs, confirmed in a Sept. 13 email to Bloomberg BNA that it plans to disclose statistics on the Worldwide Disclosure Facility, a last chance for tax evaders to disclose unpaid U.K. tax from offshore activity.
In a separate Sept. 15 interview, the spokesman declined to give a publication date.
The latest development on the WDF—revealed after HMRC rejected Bloomberg BNA’s Freedom of Information request for disclosure statistics—comes after the one-year anniversary of the program’s launch on Sept. 5, 2016. In a guidance document released for the launch, HMRC warned tax evaders that the program marks their “final chance to come forward” on hidden offshore income.
It also comes amid fears that the WDF has not been as successful so far in attracting disclosures as HMRC’s previous program, the Liechtenstein Disclosure Facility, due to its tougher penalties.
Under the LDF, which closed at the end of 2015, individuals disclosing unpaid U.K. tax liabilities faced capped penalties at the equivalent of 10 percent and 20 percent of the amount revealed. At the same time, the government guaranteed the individuals wouldn’t face criminal charges.
Today, individuals who come forward through the WDF face a minimum penalty of 30 percent on the unpaid U.K. tax. In addition, certain disclosures may result in criminal prosecution.
“There’s no carrot—it’s just a stick” with the WDF, Amit Puri, a U.K. director for tax disputes at accounting firm Grant Thornton, formerly HMRC’s offshore disclosures team leader, told Bloomberg BNA. “At the same time, HMRC are right not to make the program too attractive, as they are under pressure” to crack down on offshore tax evasion, “but have they gone too far here?”
HMRC received a total of 1.3 billion pounds ($1.8 billion) from more than 6,000 disclosures through the LDF, which launched in 2013. The average settlement figure for each disclosure was 179,000 pounds, according to official data that provides a monthly breakdown of the LDF’s statistics.
Since the WDF launched last year, HMRC has sent updates and disclosure reminders via email, with the latest coming Sept. 14. The tax authority has yet to publish any data on disclosures.
At the peak period of LDF disclosures, “we were looking at 400 or 500 cases at any one time,” Puri said. While the WDF’s online system makes it easier to register for disclosures, it results in a lack of face-to-face interaction that was a key “conversion factor” for HMRC with the LDF, he added.
Individuals have 90 days to make their disclosure through the WDF once they have informed HMRC about it. A higher penalty will be applied for an inaccurate or incomplete submission.
The WDF will close at the end of September 2018, when more than 100 countries will exchange financial data under the Organization for Economic Cooperation and Development’s Common Reporting Standard. Developed by the OECD with the support of the Group of 20 countries, the CRS will give HMRC unprecedented data on any U.K. citizens with overseas bank accounts.
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