According to accountancy firm Crowe Clark Whitehall, nearly 40% are either unaware or lack detailed knowledge of the agreement between Liechtenstein and HM Revenue & Customs, which offers clients with undeclared offshore assets an opportunity to anonymously regularise their tax affairs without criminal prosecution.
Despite this, the study of over 100 accountants found that 40% of accountants have seen a rise in the number of voluntary disclosures.
John Cassidy, tax investigation partner at Crowe Clark Whitehill, described the lack of knowledge about the LDF among accountants as “alarming”, given that the rise in voluntary disclosures indicates that it is an effective means of encouraging people to fully disclose their tax affairs.
“A lack of understanding amongst advisers is holding back the uptake,” he said. “The results here highlight the need for accountants to quickly get to grips with international disclosure facilities, particularly the LDF which, despite existing for more than five years, appears to remain under-utilised.”
Launched in 2009, the LDF offers a penalty of just 10% on undeclared tax, and as of last December had raised little over a third of its target £3bn yield, as set by HMRC.
In this year’s Budget, chancellor George Osborne announced that the closing date for the LDF would be brought forward from September 2016 to make room for a new, more limited facility.
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Last week, Peter Carnell, independent financial marketing consultant, said the LDF is not currently generating enough revenue to meet HMRC’s target revenue, and will therefore need to see a large increase in high level declarations throughout the remainder of its running time.
He said that it could be argued that the facility has not been advertised and marketed to clients properly by advisers and HMRC, meaning many are unaware of the generous settlement terms it offers.
“While it would be difficult for advisers to go up to every single client and ask them if they have anything to declare, there are certainly more effective ways of raising awareness among clients, such as notices, website announcements, and blanket emails,” he said.
He added that there will be an “atomic bomb” at the end of the year when HMRC introduces a new system for declaring offshore assets.
“A new facility will open, but the Revenue has already confirmed that it will be on far stricter terms,” he said. “Alongside this, the Revenue will really start to come down much harder on those who have kept their money offshore. The message will very much be, ‘we gave you your chance to sort this, and you still haven’t’.
“There are a few months left for advisers to alert their clients to the LDF and the generous terms it offers as an amnesty before the opportunity disappears, time is running out.”
