Investors with offshore assets have less than a week to take advantage of UK tax authorities amnesty

News - Tax

Written by Ray Clancy

Wednesday, 30 December 2009 17:45

UK investors with offshore bank accounts who have not notified tax authorities of their existence have less than a week left to reveal undisclosed assets or face a full investigation into their tax status.

HMRC is reminding those who have not declared their status for tax purposes under its New Disclosure Opportunity (NDO) that they have until January 4 to be benefit from its 10% penalty rate or face more severe penalties of up to 100% and in the most serious cases criminal prosecution for tax evasion.

Notification can be done online and does not require any tax calculation or payment. ‘HMRC simply needs a few details in order for the taxpayer to be included in the NDO. Once the scheme’s doors are closed those found to have undisclosed offshore assets will be subject to full tax investigation, penalties of up to 100% and in the most serious cases criminal prosecution,’ a spokesman said.

HMRC has issued statutory notices to over 300 banks in the UK requiring them to provide information about customers with offshore accounts. ‘This information is starting to come in and it will be used to ensure that everyone pays the right tax,’ he added.

The Financial Secretary to the Treasury, Stephen Timms MP, is urging those with offshore accounts to make sure they are in touch with the tax authorities. ‘The use of offshore accounts to evade UK tax is illegal. It deprives the UK of tax revenues to fund essential public services and is unfair to the vast majority of honest taxpayers who pay what they should,’ he said.

‘I urge anyone in this position to come forward and sign up. Time is running out but it’s still not too late,’ he added.

Dave Hartnett, HMRC’s Permanent Secretary for Tax, confirmed that from January 5 the authority will begin to investigate those who were eligible to use the NDO but failed to do so. Penalties could then be increased to 100 percent of the tax evaded – wiping out any advantage from going offshore in the first place.

It has been estimated that 100,000 people have offshore taxable assets from savings accounts or property which is potentially subject to the NDO, yet fewer than 10,000 have so far taken advantage of the initiative.

Banks and tax advisers have been complaining that the amnesty timetable is too tight and should be extended by two months. But HMRC has already extended the deadline from November 30 and has repeated that January 4 will be the final deadline to sign up for the amnesty on unpaid tax from foreign accounts.

The procedure has been criticised for being long winded because banks have to disclose account details to HMRC and then tell customers the information has been handed over. Customers must then register with HMRC if they want to qualify for the amnesty but all holders of foreign accounts are being contacted by the tax authority.