‘Tax evaders to win amnesty.’
Investors with undisclosed offshore Bank Accounts are being given an incentive to declare the status of their accounts under a disclosure initiative launched by ‘HMRC’.
This unexpected initiative follows recent legal rulings that have forced five high street banks – Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB - to divulge information on clients with overseas accounts. The Revenue’s announcement will coincide with letters issued by banks to their customers with offshore accounts telling them that their details have been given to the Revenue. The offer will cap penalties at one-tenth of their current maximum. But investors will be expected to make full payment of all unpaid taxes over the past 20 years together with interest. The offer is only open for a short period, with payments due by November. The initiative will affect individuals holding accounts in many offshore jurisdictions, such as the Channel Islands. But holders of Swiss bank accounts will not lose their anonymity because the banking secrecy laws inhibit the Revenue’s ability to extract information.
It is anticipated that investors will accept the ‘HMRC’ initiative because taxpayers face harsher treatment if the Revenue investigates their affairs after they have failed to come forward voluntarily. The Revenue says it will impose a penalty of at least 30 per cent of the maximum – which is based on the total tax due – in cases where individuals did not come forward. Tax evaders targeted by this initiative range from people who have unwittingly breached the rules to fraudsters and money launderers. They include people with overseas holiday homes and people who have earned money overseas. Although it has been legal to hold money offshore since the relaxation of exchange controls in 1979, it is illegal to conceal the interest earned.
Whilst exact amounts of ‘revenue’ for HMRC have not been stated, it is anticipated that the yield from this initiative could be between £1 billion and £2 billion. The money in offshore accounts operated by the five high street banks that were subject to the legal rulings were estimated at £1.75bn. The reduced penalty offer is also likely to encourage account holders from other banks to come forward.
Clearly, some investors will need professional advice particularly in relation to disclosing the information to HMRC. As the saying goes, ‘ it ain’t what you do – it’s the way that you do it.’ So what should investors do in this situation? In some ways the answer is easy, make the declaration to HMRC by 22nd June 2007 but before doing so seek professional advice. It could well be that an investors affairs are quite straight forward but equally what appears to be so is not actually the case. It is possible that some investors can speak to their own accountant (if they have one) but because of the complications of liaising with HMRC on this particular issue, it may be preferable to appoint specialists who have the experience on these matters. Especially if the investors’ status is somewhat complex. Bowyer Styles can be of assistance in referring to tax specialists.
So what for the future? Obviously if investors decide to retain their offshore cash deposit accounts with the Banks indefinitely, then interest will have to be continually declared. As such some investors will feel that this strategy is not tax efficient and see little point in keeping them. They may even decide to close them and return the money to Bank/Building Society accounts in the United Kingdom. The next question must be, is there a better way? Not surprisingly the answer is Yes.
Since 1988 we have been advising clients on the subject of investment and associated tax planning. Part of a client’s portfolio could be to invest offshore but in strategies that are more tax efficient than investing directly in cash deposits of Banks. As an example, if a client wants to invest wholly on cash deposits- we can access offshore cash funds where the gross rates are currently in the region of 5% to 6% per annum. Some of these accounts are ‘AAA’ rated unlike ‘UK’ Banks which may be only ‘A’ rated. Whilst offshore these cash funds grow tax-free and based on current legislation are not part of the ‘tax amnesty’ procedures previously referred to. For further information on this tax efficient investment opportunity, please visit the page on our website headed ‘International Investment.’
As HMRC regularly state in the media – ‘ tax does not have to be taxing.’
We know - we already do it for our own clients.
Click here for further tax amnesty enquiries
Investors with undisclosed offshore Bank Accounts are being given an incentive to declare the status of their accounts under a disclosure initiative launched by ‘HMRC’.
This unexpected initiative follows recent legal rulings that have forced five high street banks – Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB - to divulge information on clients with overseas accounts. The Revenue’s announcement will coincide with letters issued by banks to their customers with offshore accounts telling them that their details have been given to the Revenue. The offer will cap penalties at one-tenth of their current maximum. But investors will be expected to make full payment of all unpaid taxes over the past 20 years together with interest. The offer is only open for a short period, with payments due by November. The initiative will affect individuals holding accounts in many offshore jurisdictions, such as the Channel Islands. But holders of Swiss bank accounts will not lose their anonymity because the banking secrecy laws inhibit the Revenue’s ability to extract information.
It is anticipated that investors will accept the ‘HMRC’ initiative because taxpayers face harsher treatment if the Revenue investigates their affairs after they have failed to come forward voluntarily. The Revenue says it will impose a penalty of at least 30 per cent of the maximum – which is based on the total tax due – in cases where individuals did not come forward. Tax evaders targeted by this initiative range from people who have unwittingly breached the rules to fraudsters and money launderers. They include people with overseas holiday homes and people who have earned money overseas. Although it has been legal to hold money offshore since the relaxation of exchange controls in 1979, it is illegal to conceal the interest earned.
Whilst exact amounts of ‘revenue’ for HMRC have not been stated, it is anticipated that the yield from this initiative could be between £1 billion and £2 billion. The money in offshore accounts operated by the five high street banks that were subject to the legal rulings were estimated at £1.75bn. The reduced penalty offer is also likely to encourage account holders from other banks to come forward.
Clearly, some investors will need professional advice particularly in relation to disclosing the information to HMRC. As the saying goes, ‘ it ain’t what you do – it’s the way that you do it.’ So what should investors do in this situation? In some ways the answer is easy, make the declaration to HMRC by 22nd June 2007 but before doing so seek professional advice. It could well be that an investors affairs are quite straight forward but equally what appears to be so is not actually the case. It is possible that some investors can speak to their own accountant (if they have one) but because of the complications of liaising with HMRC on this particular issue, it may be preferable to appoint specialists who have the experience on these matters. Especially if the investors’ status is somewhat complex. Bowyer Styles can be of assistance in referring to tax specialists.
So what for the future? Obviously if investors decide to retain their offshore cash deposit accounts with the Banks indefinitely, then interest will have to be continually declared. As such some investors will feel that this strategy is not tax efficient and see little point in keeping them. They may even decide to close them and return the money to Bank/Building Society accounts in the United Kingdom. The next question must be, is there a better way? Not surprisingly the answer is Yes.
Since 1988 we have been advising clients on the subject of investment and associated tax planning. Part of a client’s portfolio could be to invest offshore but in strategies that are more tax efficient than investing directly in cash deposits of Banks. As an example, if a client wants to invest wholly on cash deposits- we can access offshore cash funds where the gross rates are currently in the region of 5% to 6% per annum. Some of these accounts are ‘AAA’ rated unlike ‘UK’ Banks which may be only ‘A’ rated. Whilst offshore these cash funds grow tax-free and based on current legislation are not part of the ‘tax amnesty’ procedures previously referred to. For further information on this tax efficient investment opportunity, please visit the page on our website headed ‘International Investment.’
As HMRC regularly state in the media – ‘ tax does not have to be taxing.’
We know - we already do it for our own clients.
Click here for further tax amnesty enquiries
Sun 5th September 2010
Authorised & Regulated by the Financial Services Authority