Harris Lipman News

Don't Rely on New Tax Amnesty, Say Accountants

18/12/2007

Britons with offshore bank accounts may be offered a second “amnesty” in an HM Revenue & Customs crackdown on offshore tax evasion, but should not rely on this as a way to sort out their tax affairs, say chartered accountants Harris Lipman.

HMRC director general Dave Hartnett suggested in a televised interview with Accountancy Age magazine on 15 November that there would be a new amnesty but added: “We haven’t quite worked out how to do it yet.” However, there has been no formal announcement and on 19 November, the Financial Times reported that HMRC was concerned that it would be unfair to give a second chance to people who should have taken advantage of the first amnesty.

The amnesty, launched on 17 April 2007, gave the holders of offshore bank accounts until 22 June to notify HMRC that they intended to disclose any unpaid tax, plus any other undeclared liabilities, going back up to 20 years.

In return, HMRC agreed to limit penalties for people who admitted owing tax to ten per cent of the outstanding bill, with no penalty for anyone owing less than £2,500. The deadline to make the disclosure, and pay all money owed, expired on 26 November and HMRC is expected to collect £500 million from the exercise.

Barry Lewis, senior partner at Harris Lipman, said: “It does appear that HMRC is considering a second amnesty. However, anyone who missed the first amnesty would be wise to sort out their tax affairs now, to put themselves in a more favourable position with HMRC, regardless of whether or not the amnesty takes place.

“Tax matters are complex, but there are harsh penalties for failing to pay tax owed, on top of the tax bill, so it makes sense to seek the advice of a financial professional, such as a chartered accountant, to resolve any issues now, rather than waiting for the taxman to call.”

Around three million UK residents have offshore accounts, worth about £180 billion, with the 30,000 under investigation because the HMRC considers they should have made a disclosure during the amnesty now facing penalties of up to 100 per cent of tax due. The amnesty came after Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB were forced to give details of clients with offshore accounts to HMRC, which is now seeking similar details from around another 175 banks and financial institutions.

For more details, contact Harris Lipman on 020 8446 9000

 

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