Second amnesty badly timed, say tax experts

Leading tax investigation figures have criticised the Treasury’s timing of the second offshore tax amnesty ­ or New Disclosure Opportunity (NDO) ­ arguing it coincides with key tax-year dates.

The Budget consultation paper revealed the second amnesty will run until March 2010, however did not specify when the disclosure would commence. Many observers have speculated it would need to launch in the Autumn to allow sufficient time for taxpayers to voluntarily disclose.

Mike Down, chairman of the tax risk and investigations management group at Baker Tilly, who is also a former tax inspector, said concluding the NDO in March will put a ‘huge strain’ on tax advisers.

In addition to the start of the new tax year on 6 April, 31 October is the deadline for paper self-assessment returns and 31 January is the cut-off for the online filing of returns.

Down expressed disappointment the NDO didn’t commence in February, particularly as HM Revenue and Customs announced in October last year it would be forging ahead with plans to undertake a second round of disclosures. ‘The right time would have been to start it in February and for HMRC to give it nine months… they still haven’t given a definite date,’ he said.

He also expects a 30% penalty to be applied to the NDO, and wouldn’t be surprised if HMRC were to announce a third amnesty. ‘It’ll be a bit like a Status Quo tour ­ you’ll get one every year,’ he said.

According to Steve Besford, tax associate at BDO Stoy Hayward, HMRC could offset the amnesty’s poor timing by consulting with the tax profession prior to its implementation. ‘There’s never a perfect time to announce these things. It’s always going to conflict with something.

‘I’m hoping they’ll see the need to consult with the profession well in advance of the launch of this, even in a limited capacity. They’ve been very tight lipped ­ I’ve heard nothing so far,’ he said.

He conceded the needs of the profession ‘are not high on the agenda of HMRC’.

HMRC is also expected to increase publicity of the NDO, with the first amnesty in 2007 being subject to widespread criticism. The first round netted the taxman £400m and targeted an estimated 100,000 taxpayers with accounts in the five major retail banks.