Offshore investors advised to take advantage of UK tax amnesty
Guernsey News, 9 December 2009 – Ernst & Young advise offshore investors to take advantage of UK tax amnesty while they still can.
UK taxpayers with investments offshore who are still in two minds whether they should disclose their unpaid taxes should make their declarations now, Ernst & Young is advising individuals, companies and trusts.
Following HMRC’s latest move to extend the offshore disclosure deadline, investors now have until the 4th January to make declarations of their intention to disclose under the UK’s New Disclosure Opportunity (NDO).
This is the second time HMRC has encouraged those with undisclosed taxable receipts to step forward and it is hoped that, under the NDO, previously undeclared income, assets and gains connected with offshore accounts or structures will be declared.
“The NDO ensures that the penalty on tax declared and paid will be capped at 10%, where it could, in normal circumstances, be as much as 100% of the tax due,” said Alison Vine, tax director at Ernst & Young.
“But, while it is suggested that under the NDO those coming forward should not face criminal prosecution there is no binding agreement to that effect.” The voluntary disclosure deadlines for other EU countries are also getting closer, with the French and Dutch Amnesty both ceasing on the 31 December 2009.
The Italian Amnesty is running until 15 April 2010, and might be an attractive opportunity, especially as Italy is believed to have the highest level of tax evasion in Europe. But, unlike countries such as Italy, where there is the added incentive of anonymity, the UK is enforcing its policy of naming and shaming serious trangressors. Nevertheless, there is still time to register an interest in making a disclosure and Mrs Vine said this should not be dismissed lightly.
“We are already seeing a number of EU countries establishing special units in the tax authorities to focus on and tackle tax evasion,” said Mrs Vine. “There also appears to be an increased emphasis on ensuring taxpayers’ affairs are accurately reported with larger penalties being imposed for incorrect returns and mistakes being made. This,coupled with an increased desire to name and shame high level evaders, is a reflection on the increased level of scrutiny and hardening attitudes against non disclosure. Those affected may be well advised to use the benevolent regimes available while they still apply.”
Having registered an interest in making a disclosure the taxpayer has until 12 March 2010 to pay the tax due.
However, a separate facility exists for UK taxpayers if their undisclosed income, gains or assets are at the time of disclosure in Liechenstein. The Liechenstein Disclosure Facility (LDF) started on 1 September 2009. It will run until 31 March 2015 and the terms of the LDF are more generous than the NDO. While a 10% penalty can still be applied no penalty will be levied where the mistake is ‘ an innocent error’.
The US amnesty came to a close on 15 October this year, this deadline having also been extended from September following an influx of taxpayers looking to take advantage of the ability to come clean without risking criminal prosecution. In total more than 14,700 Americans with previously undisclosed offshore bank accounts came forward to settle their tax affairs.
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