In recent years, HM Revenue and Customs (HMRC) have created a series of very generous ‘disclosure windows’ to allow people who have undisclosed assets in tax havens to reveal their existence voluntarily and thereby avoid both prosecution and the full extent of tax-geared penalties that can come with an HMRC investigation.
However, because HMRC have been successful in negotiating intergovernmental disclosure arrangements with more than 90 countries worldwide, which means that they will automatically provide information to HMRC on assets, income and capital gains of ‘UK’ asset-holders within their jurisdiction, the decision has been taken to terminate the current arrangement and replace it with a much less beneficial one from April 2016.
In parallel with this, HMRC have created an elite team of investigators who are to be deployed to target suspected tax evaders and commence investigations into their affairs ‘with the gloves off’.
It is likely that the first indication of such an investigation will be the receipt of a letter from HMRC. Where this mentions ‘Code of Practice 9’, the suspicion is of serious tax fraud and a prosecution is likely unless the taxpayer makes ‘a complete and accurate disclosure of all their deliberate and non-deliberate conduct that has led to irregularities in their tax affairs’.