Doubt cast on NDO revenue prediction

PricewaterhouseCoopers has predicted that HMRC’s forthcoming programme to combat tax evasion is likely to raise more than £2 billion, but the figure has been thrown into doubt by tax investigation experts.

The New Disclosure Opportunity (NDO) is scheduled for launch on an as-yet-unspecified date in the autumn, to encourage holders of offshore accounts to release details of unpaid taxes and duties – all of which will have to be paid in full, along with interest and a fixed penalty, albeit on what the Revenue says will be favourable terms.

PwC has urged individuals with undeclared funds in offshore accounts to make voluntary disclosures to the taxman during the NDO, which will run until March 2010 and is regarded by some tax professionals as an ‘amnesty’ along the lines of 2007’s Offshore Disclosure Facility (ODF).

HMRC is seeking access to details of UK resident customers with offshore accounts at more than 500 UK and foreign banks and building societies.

Recently published Special Commissioners’ decisions, in which information notices were served on four, as-yet-unnamed financial institutions, show that the Revenue remains determined to flush out all those with unpaid liabilities, claimed the Big 4 accountancy firm

Tax partner Stephen Camm said: ‘Using the estimate of tax lost in these new Special Commissioners’ decisions and applying it across the population of 500 or so institutions… it is estimated that HMRC will recover more than £2bn in unpaid tax in this second and final amnesty’.

The figure was described by Scott Gilbert of the award-winning Gilbert Tax Investigations as ‘optimistic’, although he added that it is ‘probably not unrealistic if everyone who should come forward does come forward’.

What the taxman need to do, said Mr Gilbert, is to ‘hammer home’ the message that the NDO is the last chance for offshore tax evaders to pay the taxes they owe.

Without forceful publicity, the programme will ‘end up like the ODF: a flop. It gathered a lot of information, and then the Revenue did nothing with it’, said Mr Gilbert.

He added that if holders of offshore accounts are energetically pursued by HMRC, the department will make more money from the NDO than it did from the ODF (which raised £400 million of an expected £1.75 billion).

‘But there has to be a carrot and a stick. Last time, there was a carrot but no stick.’

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