HMRC Announces Offshore Tax Amnesty for Savers and Property Owners
On the 17th April HMRC announced an “amnesty” for thousands of UK investors who have hidden money in offshore accounts. HM Revenue & Customs (HMRC) wants people to come forward and declare the income tax owed on interest earned in overseas accounts in a drive to claim more than £1bn in revenue. HMRC has given investors until June 22 to reveal their accounts. Those who do not come forward will face the metaphorical knock on the door from the taxman and will have to pay the tax owed plus penalties equivalent to up to 100% of any outstanding amount.
In extreme cases the Revenue will seek to bring criminal prosecutions although this is not likely to include the vast majority of people with offshore accounts. Many people have over a long number of years opened offshore bank accounts for a variety of legitimate reasons: working or living abroad, owning a foreign property or in connection with investments. Unfortunately, in many cases those people have simply overlooked the interest that has arisen on those accounts and failed to declare it on their tax returns. It is not the accounts per se to which the Revenue is objecting but the loss of tax arising from the undeclared interest.
The move comes after the big five high street banks - Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB - were forced to hand over details of customers with offshore accounts after HMRC won a legal battle against Barclays in May last year. It also comes following the implementation of the European Savings Directive in 2005. HMRC are now in possession of the names of account holders and in many cases copy statements relating to those accounts, so those failing to take advantage of the amnesty look likely to face vigorous investigation. Some of those banks named have started writing to all their customers who have or have had, offshore bank accounts advising them that they have passed over details to HMRC.
What should you do if you are in this position or fear you are in this position? If investors come forward early and pay tax and interest on their accounts they will receive a flat rate penalty of 10% of the outstanding bill. The disclosure must be made by 22nd June 2007 and all tax, interest and penalties must be declared and paid by 26th November 2007. If yours is a very simple case, forms can be obtained from the HMRC website. If as in many cases it is not a simple case you should contact your tax adviser.
Most cases have been made more complex by the lack of available information prior to 2000 which is often as far back as the banks’ records will go. However, in some cases the source of the income that finds its way into an offshore account will give rise to a separate claim for tax, such as under-declared business income or VAT or earnings from abroad, undeclared capital gains on foreign property or money held in nominee accounts. Also, the circumstances by which the account arose may need to be explained lest HMRC jump to conclusions about the source of the money and to ensure that the disclosure is full and complete (if it is not complete then HMRC may reopen the case in the future and impose additional penalties). In those cases you will definitely need professional advice from someone who will be able to deal with and negotiate with HMRC on your behalf. At Sandersons Solicitors we have a specialist tax department able to deal with all such matters entirely confidentially.
If you would like to speak to someone about disclosure issues please contact:
Duncan Rann
Sandersons Solicitors
17-19 Parliament Street
Hull
HU1 2BH
Tel: 01482 324662
Fax: 01482 223110
Email: enquiries@sandersonssolicitors.co.uk
Source: Beverley and Haltemprice Advertisers , May 2007