There have been rumours that HMRC will shortly be launching Offshore Disclosure Facility (ODF) Mark II, on similar terms to the previous ODF. This plan has been widely criticised; why should disclosure second time around be on the same terms as the first?

It is now confirmed that a new ODF is forthcoming – to allow the facility of voluntary disclosure to the customers of a new tranche of financial institutions. HMRC is using the same legal powers which it applied to the original five banks in front of the Special Commissioners, hoping to generate details of more non-compliant individuals from a new set of institutions. Rather than launch a facility identical to the first HMRC is asking accountancy bodies for their input into the design of a new facility via the Compliance Reform Forum.

A briefing to the Compliance Reform Forum explains that HMRC previously obtained the details of approximately 400,000 offshore bank accounts in the UK. These are thought to relate to 260,000 individuals, of which up to 25% had not included income and/or interest from these accounts on their returns.

Under the first ODF, 62,000 investors came forward in the initial registration stage, but only 45,000 of these came forward to disclose and pay on time. HMRC is pursuing those with offshore accounts who did not come forward under the arrangements where there is a risk that the full amount has not been declared. In the most serious cases, criminal investigation may follow. The scheme has so far recovered around £400m in unpaid revenue at a cost of £4.5 million.