Offshore Tax Disclosure Campaign Pilots New Compliance Transformation Approach

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HM Revenue & Customs and Capgemini demonstrate benefit of collaboration

“The implementation of this truly innovative project breaks new ground for HMRC.”
Stuart Hartlib, Compliance & Enforcement Senior Responsible Officer, HMRC

The Situation

A landmark series of legal rulings meant a number of financial institutions had to provide information to HM Revenue & Customs (HMRC) about hundreds of thousands of their UK customers who hold offshore accounts. As a result of this landmark ruling HMRC obtained a significant amount of information on offshore accounts. As the estimated value of outstanding tax could be very significant, HMRC needed to respond quickly. Capgemini worked with HMRC to design and implement an effective strategy, underpinned by a bespoke solution, in under ten months.

The Solution

HMRC focused on individual taxpayers and businesses on which they had obtained information, which could have income and gains from offshore interests not previously included in their tax returns. HMRC highlighted that there would be a limited penalty for those who registered with the Offshore Disclosure Facility (ODF) and decisive action to identify and penalize those who did not. In a very challenging timeframe, processes were re-engineered and existing HMRC infrastructure was re-used to provide new services via cost effective websites and call centers. The campaign also included mailings, booklet distribution, payment processing, risk assessment of disclosures and follow-up of customer contacts. All stakeholders, from HMRC, HM Treasury, banks, financial agents, accountancy bodies and legal authorities were involved in the design and marketing of the scheme which kept the solution practical and focused.

The Result

Over 60,000 taxpayers registered to take advantage of the ODF. Where tax is due they will pay the arrears, interest and a flat rate 10% penalty of any tax underpaid by 26 November 2007.

The pioneering new approach was a first for HMRC to:

  • declare a fixed penalty settlement
  • deploy customer contact centers and DMB resources in compliance
  • use campaign data to learn lessons about different types of customer contact and taxpayer profiles and behavior.

“The project is an early example of one of the new ways of promoting compliance – the campaign approach. It’s also a collaborative project, which is the way ahead for the future, where people come together from many different units and share their expertise.”
David Hinstridge, Project Manager, HMRC

“By any yardstick the offshore arrangements project was an outstanding achievement.”
Accounting Web