UK taxman crackdown on offshore accounts and under payers

The UK taxman has uncovered 500,000 people with money in offshore tax havens who could face severe financial penalties if they have used them to evade tax.

HM Revenue & Customs has used enforced data sharing with banks, information from whistleblowers and a new IT system which looks at anomalies between where people live, their financial assets and how much tax they pay to flag up potential tax dodgers.

It says it is confident it will raise billions of pounds in unpaid tax, interest and penalties. ‘We are not out to victimise people but we are determined to ensure we receive what we are owed. This is not just about the very wealthy, we have found chip shop owners, taxi drivers and landladies with offshore accounts,’ an HMRC spokesman said.

Last month, HMRC launched a consultation on plans to blacklist high-risk tax avoidance schemes and force users to tell HMRC that they are in a listed scheme.

It has also announced a further three tax amnesties as part of an ongoing programme to detect
groups of activity during 2011/12 where the taxman perceives that tax is being underpaid. These are private tutors and coaches, including both academic and fitness instructors, E-marketplace traders including eBay who have not fully declared their income from this activity, and tradesmen who have not been covered by the recent opportunity extended to plumbers to regularise their tax affairs.

The announcement does not give a date or even a timetable for when these campaigns will start, and does not give any specific promise of an amnesty for those who come forward to regularise their affairs.
 
However, it does stress that those who make voluntary disclosures and settle up with the taxman will get much better terms than those who wait to be found and challenged by HMRC.
 
It is likely that specific time limited opportunities will be announced in the coming months to give those with undisclosed income from UK businesses a chance to come forward voluntarily and receive favourable terms in exchange for coming clean on undeclared income and gains.
 
More generally, HMRC has also announced that it has acquired powerful web trawling tools to identify mismatches between the lifestyle and expenditure of individuals and businesses and what is declared for tax purposes. It intends to use this system in a future campaign which will home in on unexplained inconsistencies between wealth and declared income.
 
‘HMRC has been using its information powers and has invested in cutting edge technology to research several areas of industry and has begun to apply this information to collect undisclosed tax,’ said Paul Roberts, head of tax investigations at Grant Thornton UK LLP.

‘The recent plumber’s amnesty opened the door to other traders who have undisclosed taxable income. It offers traders the chance to regularise their affairs with a mitigated penalty on any undeclared tax, as opposed to the maximum of 100% penalties which HMRC usually seeks.
 
‘The eMarketplace project has long been rumoured, and will catch anyone who has been consistently buying goods and reselling them in an eMarketplace with the intention of profit. HMRC has obviously researched this using its information powers and will be looking to recover substantial sums from non registered traders. They will not be looking for the occasional sale of private items but at regular trading activity,’ he explained.

‘Announcing three new areas where they will be concentrating their efforts is a warning from HMRC. They are keen to stress that there is no hiding place for undisclosed income and gains and that it will clamp down very hard on anyone who does not take advantage of this voluntary disclosure as failure to do so will run the very serious risk of prosecution.
 
‘If anyone is contemplating coming forward, it is imperative that they take specialist advice on disclosures to see how this applies to them and their business and whether this HMRC announcement is too good to be true,’ he added.