HMRC has launched its second (and it insists ‘final’)
tax amnesty. This is aimed at people with offshore accounts, although
full disclosure must be made of both offshore and onshore irregularities.
This is urgent. You have to register for this amnesty by 30
November, although you will then have until 12 March 2010 to make
your disclosure.
If you’ve been losing sleep over your tax affairs, find
out more…
What is the tax amnesty?
There are in fact a couple of initiatives. The NDO (New Disclosure
Opportunity) is the basic tax amnesty, while the LDF (Liechtenstein
Disclosure Facility) is aimed at anyone with ‘unreported
liabilities’ in Liechtenstein but crucially could potentially
be used by those with funds in other places.
Amnesty is perhaps not quite as good as it might seem. You still
have to pay tax due, and interest, but with a reduced penalty
of 10% (it would otherwise be 35 - 100%).
The background
HMRC has confirmed that 308 banks have been ordered to provide
details about customers who hold offshore accounts. It is likely
that most banks will respond after the deadline for registration
under the NDO, which is 30 November 2009.
This means that there is a much higher risk that HMRC will discover
assets hidden overseas.
But it also gives HMRC an administrative headache, with thousands
of records to check, follow up and prosecute. By encouraging many
taxpayers to come forward voluntarily, the authorities will obviously
be able to get through the rest of the cases more easily.
NDO: New Disclosure Opportunity
The NDO gives an opportunity to taxpayers with offshore accounts
to set the record straight. There is also a penalty of 10% of
the tax due (or 20% in certain cases), compared to up to 100%
otherwise in the normal course of events – and possibly
even criminal prosecution.
The NDO does not offer a guarantee that you will not be prosecuted
but HMRC say that anyone making a full and accurate disclosure
is very unlikely to face prosecution unless there are very exceptional
circumstances such as criminal activity.
LDF: Liechtenstein Disclosure Facility
The LDF is a special agreement with the government of Liechtenstein.
It is separate from the NDO, and is very different. The facility
runs for several years. You can register under the facility from
1 September 2009 onwards, but financial intermediaries in Liechtenstein
have until 31 March 2015 to notify clients that they are potentially
affected.Clients then have a further 18 months to ensure that
they have registered with HMRC and filed the necessary report.
So there is no need for immediate action. Clients and professional
advisors should use the available time to take specialist advice
before committing to action.
In general, the terms of the LDF are more favourable than those
of the NDO, and include a no prosecution guarantee. There may
also be an opportunity to transfer certain funds into the LDF,
with potentially large tax savings.
DON'T IGNORE THIS OPPORTUNITY
There is nothing wrong with offshore accounts but if you have
been using them to avoid paying UK tax, now is your opportunity
to come clean while keeping penalties to a minimum.
Not sure what to do? Contact us for impartial and confidential
advice on 0845 652 5220 or use our contact
form.
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