The taxman is bringing in new swingeing penalties (on top of the existing penalties) for anyone who evades tax using an offshore bank account.
HMRC hijacked Alistair Darling’s pre-Budget speech for some PR for the tax amnesties: the New Disclosure Opportunity (NDO) and the Liechtenstein Disclosure Facility (LDF). The chancellor announced the introduction of a new additional and hard hitting penalties regime; which could result in tax evaders facing combined penalties of up to 200% of their unpaid tax (as well as having to pay over the tax and interest). A 40% taxpayer failing to disclose £10,000 of income arising offshore could have to pay the taxman as much as £12,000 plus interest! As the tax and interest can go back up to 20 years that could be a staggering bill compared to the tax that would have been due. Tax evasion can be simply not declaring it on your tax return when you should have done.
For anyone undecided about whether of not to disclose under the current amnesties (whose 10% penalty is looking increasingly generous) the risk equation has been given a big jolt. People using the NDO for insatnce will have to stump up tax plus 10% penalty. For the next year NDO- avoiders wil then have to pay tax plus 30% or more if caught. But by 2011 NDO refuseniks will have to pay tax plus at least 60% if caught! And that’s the lucky ones who don’t get prosecuted!! Suddenly failing to disclose is looking a much riskier bet.
The new measures will also make it a legal requirement for offshore bank accounts to be declared to the taxman at the time they are opened – or presumably straight away if an account is already open. Failure to do so will be another offence in its own right; with yet further penalties. The message is clear from HMRC: take the small carrot now or risk the very big stick!
The offshore tax amnesty processes are straightforward in simple cases. But there are many pitfalls for the unwary or those with more complex tax affairs. Badly managed Disclosures can have the reverse effect; leading to higher penalties; a Civil Investigation of Fraud enquiry; or even prosecution.
Lynam Tax Enquiry Experts had substantial experience of the first Tax Amnesty (Offshore Disclosure Facility) and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997