George Bull, head of tax at Baker Tilly, said HMRC’s hopes to raise as much as £1bn through tax, interest and penalties is unrealistic and that a yield of just over £500m through around 5,000 disclosures is more reasonable.
Bull said the £1bn target is above HMRC’s past estimates and contrasts with previous disclosure opportunities where the eventual returns fell short of expectations. In particular, Bull cites 2007’s Offshore Disclosure Facility which was expected to yield £1bn but only realised some £400m, a shortfall of 60%.
However, HMRC has defended its target. A spokesperson said: “We think £1bn is a safe and cautious estimate of what may be recovered through the LDF over the course of five years.
“It is of course notoriously difficult to second guess the outcome of disclosure schemes particularly one as ground breaking as the LDF and we aspire to more.”
As reported, Baker Tilly also believes HMRC has tightened the terms of the LDF in the second joint declaration signed by the UK and Liechtenstein authorities last week to stop people opening nominal accounts in Liechtenstein simply to serve the LDF. While no specific amount has yet been set by HMRC, it has said an account must be “meaningful and of sufficient value and permanence to reflect the spirit of the MOU.”
It is also widely believed there has been pressure from the Liechtenstein institutions to strengthen the terms to ensure they benefit from the agreement.
An HMRC spokesperson said: “The second agreement makes it clear that those wishing to come forward and benefit from the preferential terms offered by the LDF must do so disclosing all offshore income, and not by making a token a gesture simply to meet the minimum requirements.”
