New Tax measures for Offshore Accounts

HM Revenue and Customs will launch next year, a second campaign in order to get thousands of people to pay taxes on offshore bank accounts.

They will call this the “offshore disclosure facility” and it will target people with offshore accounts in around 300 banks and building societies across the globe.

HMRC’s first campaign last year, was aimed at customers of the main five big high street banks was a success as it raised £450 million from about 45,000 tax payers.

The HMRC have also announced that some tax dodgers it uncovered last year will face prosecution:
“the intention of the new facility will be to provide an opportunity for account holders to inform us of their own accord of any unpaid tax or duties and to settle their debts in a similar way to the original offshore disclosure facility,”

One of the ways the company have tried to encourage people to step forward of their own accord, is that the fines they will face will be limited this way than if they are caught out at a later date.

In theory, the Revenue can charge up to 100% of the unpaid tax. Last year however, the penalty was capped at 10% in order to try and encourage people to confess to tax dodging. This year, the rate is expected to be 20% to 30% of the unpaid tax.

Saffery Champness accounts person, Ronnie Ludwig, has said that this rate is not enough to get people to pay their taxes: “The previous deal was not sufficiently generous to encourage people to come forward, so I anticipate a smaller response this time.”

The Revenue will not reveal how many people it thinks has money hidden in offshore accounts, although, clearly if they are introducing this measure, they are expecting that perhaps tens of thousands of people do have these accounts.

Chas Roy-Chowdhury, from the Association of Chartered Certified Accountants (ACCA) has said: “The effectiveness of the last campaign seems to have been a bit patchy…there must be some high-value targets the Revenue want to come clean.”

Last year, HMRC flushed out a list of around 400,000 accounts it considered to be suspicious.  Revenue spokesman explained that: “many of the customers for whom HMRC received information had already paid any tax due on funds invested and had nothing to disclose.”

Of the 100,000 people whom the Revenue still considered to be suspicious, 45,000 then came forward and paid between them around £45 million. Around 50,000 others that the Revenue still consider to be suspicious are still being investigated and some will soon be prosecuted.

HMRC said they “made follow-up checks of the disclosures made and has started a programme of checks on those who did not take the opportunity to come forward. In the most serious cases, we are carrying out criminal investigations and we will bring some prosecutions before the courts in the New Year.”

They will write to the latest group of banks and building societies, asking them to reveal the names and addresses of all its UK residents that have offshore accounts, and then write to said residents asking them to pay their unpaid tax.

Some of the confessions to tax dodging last year, included someone who disclosed over £60,000 due to failure to declare income from her holiday home, someone who sold a property portfolio and placed funds in an offshore account and never declared them and faced a £1.7 million fine.

Also, a business man diverted profits of around £1.3 million into a Channel Islands bank account, a plumber who paid £10,000 from informal jobs into an offshore account, and a self-employed man who invested £50,000 inheritance lump sum offshore.