Well, it seems they have been very busy.
1. They have published a list of "tax dodgers" or deliberate defaulters.
This is the first time that such a list has ever been published. It is a list of individuals who owe at least £25,000, most of whom are sole traders/small companies, a number of whom hail from the North West. These individuals/companies will remain on the list (published pursuant to s.94 of the Finance Act 2009) for 12 months.
However, most of the media reaction to this questioned why it seemed to be only sole traders/small companies on the list and not more high profile individuals or companies? They have also asked why HMRC grant anonymity to those whom they believe have defaulted deliberately and failed to declare tax liabilities on offshore accounts for years and benefited from historic high interest rates. They also accuse HMRC of "naming and shaming" easy targets... hardly the "shock and awe reaction" that HMRC had envisaged.
It’s unlikely that publishing such a list will have any deterrent effect, and frankly, the public are probably more concerned about tax deals that wealthy so called "non-domiciled" individuals and multi-nationals have secured. To label easy targets such as a small hairdressers/building companies, who often provide necessary services to their local community, in such a manner would appear to be very heavy handed. This may backfire on HMRC in time.
Deliberate defaulters will now find themselves within the Revenue's programme "Managing Deliberate Defaulters" (MDD) which means that they will be red flagged for 5 years, subject to surprise visits from HMRC and intense scrutiny.
2. A new Manx Disclosure Facility (MDF) 19/02/2013 has been agreed, which is available for those tax payers with assets in the Isle of Man who have not disclosed their assets/liabilities to the Revenue.
To be frank, the LDF (the Liechtenstein Disclosure facility) has markedly less restrictions and is more favourable. Most experts will be advising their clients to use the LDF.
With MDF the tax payer makes full and complete disclosure to the Revenue, pays the full amount due, and HMRC will then have 9 months to review the disclosure.
It will exclude anyone who has previously been investigated by the Revenue or by virtue of the UK/Swiss tax agreement. Additionally, unlike the LDF (and indeed other disclosure facilities) it does not provide immunity from prosecution.
3. According to the Financial Times (22/02/2013), the LDF has proved to be incredibly lucrative for HMRC; taxes collected through this scheme have doubled, though far short of the £3 billion target that HMRC set itself for 2016 when the LDF scheme finishes. Experts expect increased tax collection from those turning away from the UK/Swiss agreement, and indeed the Manx agreement, because the LDF terms are so favourable.
4. The Revenue successfully prosecuted two Manchester businessmen last week at Liverpool Crown Court, both of whom pleaded guilty to tax offences relating to either non or partial disclosure of monies held offshore. They were sentenced to immediate terms of imprisonment and ordered to pay the missing £500,000.
5. Finally, the next domestic targets are residential landlords either for missing CGT or failing to declare rental income. Expect an aggressive letter soon on your doormat if you are such a landlord!
Need any advice? Worried about the prospect of a HMRC investigation or prosecution? Contact Jeffrey Lewis or Siobhain Egan.
