Guernsey Launches Tax Amnesty

by Amanda Banks, Tax-News.com, London

15 December 2010

Guernsey’s Director of Income Tax, Rob Gray, has announced the introduction of the Income Tax Irregularities Scheme (ITIS), to be offered to taxpayers with outstanding tax liability for previous years, from January 1, 2011.

Introducing the initiative, Gray said: “The ITIS is a disclosure opportunity which I am offering for a limited time in order to assist taxpayers who have omitted income from their income tax returns, or have other tax irregularities, to put their income tax affairs in order, by their own volition, without penalties being imposed or having the matter referred for prosecution.”

Gray explained that the decision is in line with many other territories globally who have offered taxpayers similar opportunities. In the present financial climate, he explained, it is also vital for public revenues in both Guernsey and Alderney that every taxpayer pays their correct income tax liability.

Urging any taxpayers with outstanding tax liability to come forward, Gray noted that Guernsey’s ability to fully investigate suspected tax evasion has been markedly bolstered in recent years, due to:

• Wide-ranging powers enabling the Director to require third parties to provide information relating to another person’s income tax affairs.
• Closer working between the Director and Guernsey Law Enforcement, following the enactment of The Disclosure (Bailiwick of Guernsey) Law, 2007.
• Information received regarding accounts and assets held in the European Union, through the European Union Savings Directive.
• Information becoming available from other territories through Guernsey’s ever increasing network of Tax Information Exchange Agreements.
• Information given to the Director by members of the public concerning taxpayers they believe are evading tax.

“It is becoming harder for non-compliant taxpayers to continue to evade tax and the consequences of them doing so may be more costly than they may have realised. Any person deliberately evading tax is potentially liable to be prosecuted through the courts,” Gray warned.

“Now is the time for any non-compliant taxpayers to make a full and complete disclosure of their omissions or other irregularities. I have introduced this facility in order to assist the non-compliant taxpayer to put their tax affairs in order; if they choose not to take advantage of the generous terms offered then, upon discovery, they will face the full implications of their tax evasion," Gray added.

The terms of ITIS are:

• The intention to make a disclosure under ITIS must first be registered by March 31, 2011;
• A full and complete disclosure of all of the omissions/irregularities must then be made by September 30, 2011;
• A certificate must also be completed confirming that a full disclosure has been made;
• So long as the disclosure is full and complete the Director will settle the matter without referring it to the Law Officers for their consideration of instituting a prosecution under the Income Tax Law;
• No penalty will be imposed, under the Income Tax Law, so long as the disclosure is made within the terms of ITIS; and,
• Late payment surcharges will continue to be applied (but, by law, no surcharge will be due if the total amount of unpaid liabilities is less than GBP1,000).

Gray said that taxpayers failing to avail themselves of the scheme may receive a minimum penalty of 100% on the outstanding tax balance.

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