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STEP Gives Measured Welcome To UK Offshore Amnesty

by Jason Gorringe,, London

23 April 2007

Speaking last week at a STEP Conference on the future of trusts in London, Aileen Barry, a Director at law firm at DLA Piper, said she felt that HMRC’s disclosure regime “could involve a gamble I would not take”.

HM Revenue and Customs early last week announced arrangements enabling investors with offshore accounts to disclose to HMRC any income and gains not previously included in their tax returns.

The facility is open to those who hold or have held an offshore account, either directly or indirectly, that is in any way connected to a loss of UK tax and/or duty.

For a limited period, HMRC added, taxpayers can come forward and make a full disclosure of all undeclared liabilities, not just those connected with an offshore account. Personal disclosures or those made on behalf of others will be accepted under the terms of the Offshore Disclosure Facility.

However, Ms Barry explained that the disclosure regime was fine for straightforward cases, but was less useful for more complex cases which involve trusts and companies.

She announced that:

“If clients need to make a disclosure they should do so now but the problem is that clients with complex affairs may not know how to separate tax on income from other funds. They will need to seek professional advice but advisors may be reluctant to confirm whether any disclosure involving estimates or judgement calls, in the absence of supporting documentation, will be accepted."

"Clients should take care: some advisors are suggesting that clients should make disclosures, hoping that HMRC will be inundated with submissions and never get round to checking and this is a gamble I would not take.”

The DLA Piper Director went on to explain to delegates that a potential pitfall of the new disclosure regime is that there is no guarantee of immunity from prosecution, because the scheme is not covered by the HMRC codes of practice which govern civil settlements of tax investigations. A partial disclosure may lead to further investigations or even prosecution.

John Riches, deputy Chairman of STEP concluded:

“We welcome the disclosure regime if it encourages clients to pay tax that is due. But the regime might have been more effective if there was a facility to have upfront dialogue with HMRC, so the taxpayer will be confident their disclosure is complete. Moreover whilst the five month time period is reasonable there should be the flexibility to extend it by mutual agreement with the revenue.”

A comprehensive report in our Intelligence Report series examining offshore confidentiality is available in the Lowtax Library at and a description of the report can be seen at

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