HM Revenue and Customs have announced that some 10,000 people have notified their intention to disclose previously undeclared offshore income and gains. Those who came forward under the New Disclosure Opportunity now have to disclose and pay any unpaid tax, interest and a 10% penalty. HMRC is now receiving data on offshore accounts requested from over 300 banks and is using this to identify those who should have come forward but have chosen not to. Enquiries will be started into those cases.
The Right Honourable Stephen Timms, Financial Secretary to the Treasury, commented "Hiding money in offshore accounts to evade tax is economically and morally unacceptable. It robs public services of funding and places an unfair burden on the honest majority of taxpayers. Some people will still be tempted, and that is why the Government will bring forward measures during 2010 to build on the significant progress made both in the UK and globally during 2009 in closing down offshore tax evasion for good."
Dave Hartnett, HMRC’s Permanent Secretary for Tax, said "Now the NDO is closed, HMRC is beginning the job of using the data we have obtained from banks to identify people who have not made disclosures despite having hidden their money offshore. We are starting our investigations and penalties may be up to 100 per cent of the tax not paid. But it's very important to remember that, when someone comes forward voluntarily, the penalty is always lower than when we catch the evader. This means it's still well worth contacting HMRC if you have undisclosed offshore accounts.We are also examining information about offshore accounts in order to help us identify intermediaries who have assisted UK residents in hiding money offshore."
The Chancellor announced as part of his Pre Budget Report that the Government will change the law so that all unpaid offshore tax will be viewed as deliberate non-compliance thus attracting penalties up to 100% of tax due. In addition, any tax evasion carried out by use of hidden offshore accounts could leave the evader liable for aggregate penalties of up to 200% of tax due, plus interest.
Still available for qualifying UK taxpayers with undeclared funds is The Liechtenstein Disclosure Facility (LDF) which runs from 1 September 2009 to 31 March 2015:
- Following this agreement with HMRC, the government of Liechtenstein has put in place a Taxpayer Assistance Compliance Programme (TACP) which requires action by financial services providers in Liechtenstein to identify UK clients and confirm that they are meeting their UK tax responsibilities. Those who fail to demonstrate they are complying with the law will have their accounts closed.
- Individuals who are liable to UK tax on assets in Liechtenstein may disclose those assets and the arising income under the Facilitiy in order to regularise their tax situation in the UK.
- Worthy of note is that HMRC's current interpretation of the LDF allows UK taxpayers to transfer funds into Liechtenstein in order to take advantage of the reduced assessment period and lower penalties
Contact AegisTax in complete confidence for further information and advice on the LDF or any other tax problems.
