New disclosure campaign for unpaid offshore taxes
HM Revenue and Customs (HMRC) is to launch a new campaign aimed at reclaiming the tax payable on undeclared funds kept in offshore accounts.
The new offshore disclosure scheme is set to start up in the autumn.
To encourage more taxpayers to declare their liabilities voluntarily, HMRC has said that the penalty payable on so far undisclosed accounts will be limited to 10 per cent of the unpaid tax.
The penalty is also to cover those funds that have been lodged undeclared in UK accounts.
A spokesman for HMRC said: “[People] will only receive beneficial terms if they make a full disclosure and if that includes other non-offshore funds, then the terms of the new disclosure opportunity will apply to the other funds as well.”
However, those taxpayers who have been given the chance to disclose their liabilities in a previous campaign but who did not make a declaration will face much higher penalties, ranging from 30 per cent to 100 per cent of the unpaid tax.
Entitled the New Disclosure Opportunity, the campaign follows on from a similar scheme that was implemented in 2007 and which raised £450 million in tax from 45,000 taxpayers.
The current campaign was flagged in this year’s Budget and will run from the autumn to March 2010.
In addition to the tax owing and the penalty charge, those with undeclared income will have to pay interest on the sums involved.
But people have been warned that this will be the last amnesty. Once the campaign has been concluded, those taxpayers with money hidden in accounts can expect much more severe penalties.
The Chartered Institute of Taxation (CIOT) welcomed the advance notice that HMRC has given of the scheme.
The CIOT added that it hoped this will lead to further publicity from HMRC once the campaign has been launched, providing people with the opportunity to disclose.
Gary Ashford, chairman of the CIOT’s management of taxes sub-committee, said: “Those people who have not declared offshore income have evaded tax and we do not condone tax evasion in any way. However, it makes every sense to help such people regularise their tax affairs, particularly as many will have fallen foul of the law through mistake or misunderstanding.”
Mr Ashford continued: “We are pleased that a number of our recommendations have been accepted, including that the flat rate penalty for those who had no previous invitation to disclose should be 10 per cent in line with the previous Offshore Disclosure Facility (ODF) and that, importantly, tax advisers will be able to file online on behalf of clients.”
At the moment, HMRC is seeking the legal rulings needed to compel some 500 banks to produce records of accounts held offshore by their customers.