At the start of 2013, HM Revenue & Customs (HMRC) negotiated a number of disclosure facilities, one each with the Crown Dependencies of Jersey, Guernsey and the Isle of Man.
The MDF was a means for any taxpayer to resolve a UK tax liability arising from an asset held in the Isle of Man. The MDF was available to individuals, trusts or companies and was originally available from 6 April 2013 until 30 September 2016 but was closed early on 31 December 2015.
To qualify for the MDF a taxpayer could not be linked to another HMRC disclosure facility, and must not have previously been the subject of a criminal investigation.
As the Isle of Man is a Category 1 country, so far as penalties are concerned, failure to remedy any tax compliance failure could have resulted in penalties of 100% of the tax (again) as part of any Settlement, plus interest.
The key terms of the MDF
Under the MDF, a taxpayer was required to:
- make a Disclosure within 6 months of being registered under the JDF
- disclose irregularities from commencement or back to 6 April 1999, whichever was shorter
- all taxes at the prevailing actual rates
- interest on all tax paid late
- a penalty capped at 10% of the tax due for the 10 year period ending 5 April 2009, thereafter 20%
- higher penalties of 30% for 2010/2011 onwards as the inaccuracy related to a Category 1 country
- make a payment within 30 days of the application date
- disclose all their assets and liabilities as at 5 April prior to the date of disclosure
- be told whether their disclosure was accepted within 9 months
What taxes were covered?
Under the MDF, the following taxes were covered:
- Value Added Tax
- Corporation Tax
- Employment taxes (PAYE, Employees NIC and Employers NIC)
- Inheritance Tax
- Capital Gains Tax
How was Haines Watts able to help?
Haines Watts was able to:
- Register those who wished to make a disclosure to HMRC under the terms of the MDF
- Manage the process throughout for them
- Discuss matters with HMRC initially on a no name basis
- Agree with HMRC in advance how matters were to be treated
- Calculate the potential tax liability
- Determine how matters would be treated and taxed with HMRC
- Discuss with the taxpayer how to proceed with the disclosure
- Submit a Report with all the relevant forms completed
- Negotiate a full and final Settlement with HMRC as necessary
If you wish to discuss this or any other matter with a member of the team, please contact us.