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UK Offshore Account Holders Ignoring HMRC's Amnesty

by Robert Lee, Tax-News.com, London

07 June 2007


It has emerged this week that only 1% of the estimated 400,000 bank accounts identified by HM Revenue and Customs as part of its offshore tax avoidance crackdown have been declared to the tax man under HMRC's offshore disclosure scheme.

According to the Financial Times, only about 4,300 offshore account holders have come forward under the amnesty. But HMRC chief David Harnett reportedly denied being disappointed by the low take-up, and expects a last-minute rush of declarations as the June 22 disclosure deadline approaches.

"When we look at amnesties in other parts of the world, there tend to be a lot of disclosures in the last week," he told the paper.

Disclosures made under the amnesty include a retired professional with an Isle of Man account who owed GBP350,000 in tax, and a landlady who kept her takings in a Channel Islands account and faces a GBP10,000 bill, the FT report claimed.

Tax advisors are urging those with undisclosed offshore income and assets to take advantage of the disclosure scheme and have warned taxpayers that HMRC will begin a 'July offensive' against those suspected of offshore tax evasion who do not inform the tax man of their accounts.

"If additional tax is found to be due as a result of these enquiries, HMRC will seek considerably higher penalties than the 10% on offer under the amnesty and may even launch criminal investigations," Steve Besford, head of tax investigations at tax advisory firm, Chiltern has said.

Those with undisclosed tax liabilities connected with an offshore account who do not notify by 22 June could well find themselves under investigation any time after 9 July, according to Besford. Cases for investigation will be distributed to local offices, Civil Investigation of Fraud Offices and Special Civil Investigation Offices immediately after this date. By contrast, people who notify their intention to make a disclosure before the deadline of 22 June can be assured that HMRC will not raise any enquiry into their affairs prior to the 26 November disclosure deadline, by which time those seeking amnesty must have handed over all documentation to the tax department.

HMRC said it has recently obtained information about holders of offshore accounts from a number of banks, and has obtained similar details through the European Savings Directive. The banks in question are thought to include Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB, according to reports.

The amnesty allows taxpayers to 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 also be accepted under the terms of the Offshore Disclosure Facility.

A comprehensive report in our Intelligence Report series examining offshore confidentiality is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report1.asp

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