Financial advisers say a new tax amnesty announced by the Government is likely to be of “great interest” for individuals with offshore accounts.
The New Disclosure Opportunity was brought in last week and is estimated to target 100,000 investors at more than 500 UK and foreign banks and building societies believed to be using offshore bank accounts, potentially to avoid paying the correct amount of tax.
The targeted banks are expected to be issuing letters to their customers informing them of the notification period which will run from September 1 to November 30 for paper disclosure registration to HMRC and from October 1 to November 30 for online disclosure registration.
Recent news regarding the Organisation for Economic Co-operation and Development’s “grey list” of states which need to improve their tax co-operation standards has sparked global interest in the use of offshore accounts and the measures authorities should take to prevent misuse.
Birmingham-based Heather Taylor, member of financial adviser Grant Thornton’s national tax investigations team, said: “Tax evaders who knowingly avoided disclosing their assets under the initial 2007 Offshore Disclosure Facility in the hope they would not be caught are likely to be feeling the heat now.
“In some extreme cases, individuals could face penalties of up to 100 per cent of the tax due and in exceptional circumstances, a criminal investigation could follow. If any taxpayer in this situation receives a letter from their bank, they should consider taking advantage of the NDO or face serious consequences.”
Even if a disclosure is made under the NDO, there has been no announcement that this would lead to immunity from prosecution, Ms Taylor said.
Offshore account holders making disclosures under the NDO face a fixed penalty of ten per cent, but those taxpayers who were informed of the previous ODF by HMRC and who did not come forward under the 2007 ODF will face a 20 per cent fixed penalty.
Ms Taylor warns that HMRC has said penalties will be no less than 30 per cent for those who fail to make disclosures under the ODF or NDO.
David Pedley, also of Grant Thornton, added: “Tax evaders had their chance to come clean and pay reduced penalties of ten per cent under the initial ODF.”
After registration, the submission deadline for full paper disclosures of any liability is January 31, 2010, and for online disclosures is March 12, 2010.