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In the latest HMRC podcast, Permanent Secretary for Tax, Dave Hartnett, warns that anyone with undeclared offshore tax liabilities who fails to come forward under the New Disclosure Opportunity (NDO) faces an increased risk of prosecution.

Under the NDO, people making a complete and accurate disclosure of their untaxed offshore liabilities between 1 September and 12 March 2010 will have any penalty capped at 10 per cent, or 20 per cent if they failed to take up a written offer of a capped penalty under HMRC’s 2007 Offshore Disclosure Facility (ODF).

In the podcast, Dave Hartnett makes it absolutely clear that penalties will be “much higher than 10 or 20 per cent” for those who don’t come forward, and stresses that “there will not be another chance” to do so.

“This time,” he warns, “we are going to have information from the majority of banks operating in the United Kingdom. So, we’re going to have a much bigger database from which to work.”

The podcast is available to listen to or download for free from the HMRC website at www.hmrc.gov.uk/podcasts.

To use the NDO a notification of the intention to disclose must be made to HMRC between 1 September and 30 November 2009.

Those notifying on paper can do so from 1 September to 30 November.

Those notifying electronically can do so from 1 October to 30 November.

Disclosures can then be made:

• on paper from 1 September 2009 to 31 January 2010
• electronically from 1 October 2009 to 12 March 2010.

Those to whom HMRC wrote to in 2007 offering the 10% rate but did not complete the ODF procedure and now want to disclose will have an opportunity to do so with unpaid tax attracting a penalty of 20% which is more favourable than normal, whilst demonstrating that special rates once declined are unlikely to be repeated.

Once this disclosure window closes on 12 March 2010, those taxpayers who have not come forward but are found to have unpaid tax liabilities will face penalties of at least 30% rising to 100% of the tax evaded. They also run a risk of criminal prosecution.