HM Revenue and Customs has announced a second amnesty for people who have squirreled money away into offshore accounts to avoid tax. Under the terms of the deal, if tax dodgers 'fess up between September and November they’ll only face a fine of 10% of the taxes owed – whereas if they ignore it and get busted later, they’ll face a much bigger fine and possibly criminal charges. The Government will argue it’s a sensible way to get these taxpayers back into the fold – but presumably the prospect of an extra £1bn to boost the threadbare public coffers played a part in the decision too.
This second amnesty, aka the New Disclosure Opportunity, will apparently be much more wide-ranging than the first one (or the Offshore Disclosure Facility, to use its full title), which was primarily targeted at the customers of five major banks and raised about £440m in revenue. This time round it will target customers at any kind of financial institution that offers an offshore account, and will cover any asset held offshore that could be used to pay down debt. This could cover as many as 100,000 investors at more than 500 institutions, according to accountants Grant Thornton, potentially raising up to £1bn.
Those concerned will receive a letter telling them that they have three months to declare their holdings, starting from September 1st and running through to the end of November. If they come clean, their fine will be limited to 10% of the taxes dodged (plus the original bill). If they only make a partial disclosure, or ignore the pesky taxman altogether, their penalties will be much more stringent – probably a fine of over 30% of the amount owed, and possibly a criminal prosecution for tax evasion. So as approaches go, it’s less ‘carrot and stick’, and more ‘small stick and bigger stick’. Or less of an amnesty, more of an early bird discount.
Theoretically this will be people's last chance to disclose, although we seem to remember that HMRC said that first time round too (unless people believe amnesties are final, there’s not much point having them) and that lot are getting a second bite of the cherry. But it’s likely to be an attractive option for those who have ended up with assets held offshore, and are nervous about bringing them back into country for fear of getting into bother - which is no good for the taxman, since they’re usually under the radar and generate no revenue. This way they can declare with no questions asked, and the Revenue gets some extra cash. So it makes a lot of sense.
What we don’t know is the plan for those who don’t comply. Determined tax dodgers will probably have an army of lawyers and accountants to hide behind, and it’s not clear that the Revenue has the resources to go after them, particularly in light of recent cuts. So maybe voluntary disclosure is just about the best it can hope for...
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