Government plans to close a tax avoidance disclosure facility may generate a surge of business for HMRC, according to experts.
As part of the Budget, the Government said it would bring forward the April 2016 closure of the Lichtenstein Disclosure Facility to the end of this year.
The Lichtenstein mechanism offers those who admit avoiding tax through offshore accounts a maximum penalty of 10 per cent on top of tax owed and interest, as well as immunity from criminal prosecution.
However, the new regime will bring in 30 per cent penalties, as well as scrapping immunity in some cases from the end of this year.
BDO partner Dawn Register says the potential for prosecution may drive penitent evaders either to a regime designed for onshore tax dodging, or away from disclosure altogether in the long run. Evaders caught without disclosure face a maximum 200 per cent penalty.
Register says: “Prosecution could certainly drive people away from using it. There is also Code of Practice 9, which does give immunity from prosecutions, but the down side is that there is no fixed penalty.
“If people come to me I would possibly tell them to use COP9 rather than this new facility that potentially wouldn’t give them immunity.”
Wingate Financial Planning director Alistair Cunningham adds: “The simple message is that if you need to make a disclosure, do it sooner rather than later.”