Offshore account holders urged to take advantage of tax ‘amnesty’
OFFSHORE account holders have been given a second tax ‘amnesty’, which offers a reduced penalty for the disclosure of unpaid tax.
The New Disclosure Opportunity (NDO) is being hailed a ‘last chance saloon’ for those with offshore bank accounts who have so far evaded tax liabilities.
According to Chris Oares, partner in Ernst & Young’s controversy and risk management practice, HM Revenue & Customs (HMRC) is not just interested in undisclosed income from overseas accounts but also the possibility that the capital comes from an untaxed source.
During the first amnesty in 2007, typical examples included undeclared takings from UK businesses, rental property from overseas properties and income earned overseas by UK residents that was undeclared in the UK.
“If people do not take this opportunity and their tax position is not correct then they should expect HMRC to come down on them very hard,” added Mr Oares.
“The NDO is being offered as HMRC are in the process of issuing notices to over 250 banks asking for details of offshore banks accounts held by UK customers.
“Apathy really isn’t an option – people with offshore accounts need to be proactive and ensure that their tax position is correct in all aspects.”
In return for a full disclosure of all tax irregularities, participants will qualify for a drastically reduced financial penalty of either 10% or 20% of the tax due, compared to the maximum 100% that HMRC would be able pursue if it launched its own enquiries.
Taxpayers who do not take this final chance will face penalties of 30% upwards if HMRC has to make its own enquiries acting on offshore account information the banks are being forced to provide.
According to Steve Besford, a director at BDO Stoy Hayward, plans are afoot to ‘name and shame’ tax evaders.
“HMRC is flexing its muscles with new information and inspection powers it acquired in April,” he said.
“It should not be forgotten that HMRC can, at any time, recover tax from up to 20 years previously, with interest for late payment and financial penalties – something that could prove very painful indeed.”