The taxman’s recent offering of an ‘amnesty’ for offshore tax-avoiders seems to have grabbed the attention of the entire nation. And yet under closer inspection it would seem that it isn’t really an amnesty at all, warns a local tax expert.
In a recent announcement, HMRC has vowed to give investors of offshore accounts or overseas property the chance to come clean about any income previously not disclosed in their tax returns, without being subject to hefty fines. There is also a parallel ‘amnesty’ for UK source income, although this aspect has not received the same degree of publicity.
Labelled the ‘offshore disclosure facility’, taxpayers have until June 22 2007 to notify HMRC of their intention to declare unpaid tax, after which they have until November 26 2007 to calculate the amount of tax owed along with any interest lost. The incentive being that HMRC is offering a capped rate penalty of ten per cent, while no penalty will be charged for ‘innocent’ or where the amounts undeclared are less than £2,500 in total.
Those who fail to do so before this period face being potential liable for a full tax investigation and forced to pay a tax penalty of 100 per cent.
Alan Weatherer, senior partner at Sutton Coldfield based Weatherer Bailey Bragg comments: “Despite all the publicity that it has gained, HMRC’s offering of an ‘amnesty’ isn’t really an amnesty at all. This is because there is no guaranteed immunity from prosecution for those who do come forward and there are fears throughout the profession that a small number of high profile individuals will be prosecuted as a warning to others.
“Plus, for those who do come forward, if they previously signed a complete disclosure statement to the UK tax authorities and it now proves to have been false, then the amnesty will not even apply.
“However, those who do not choose to come forward voluntarily run a high risk of being sought out at a later date and there are rumours that HMRC is actually preparing to move in on all those liable immediately after the amnesty deadline by sending out thousands of enquiry letters.”
Alan concludes: “This offering of ‘amnesty’ is not as clear cut as commonly perceived and needs to be carefully considered and it is high advisable to contact a professional adviser with any queries.”
For more information please contact Alan Weatherer on 0121 355 1901.