Revenue offer tax disclosure carrot
17 Apr 07
Reduced 10% penalty on undeclared offshore income if taxpayers own up
HM Revenue and Customs today announced a facility for UK domiciled taxpayers with undeclared offshore income, to make good arrears of tax with a low 10% penalty if they own up promptly.
Last year HMRC won the right to obtain details from banks and other financial institutions of UK customers with credit or debit cards connected to an offshore account. The resulting disclosures have given the taxman a huge amount of information about previously undeclared foreign income - far more than HMRC is resourced to cope with. Today's announcement represents their solution.
Under the announcement, anyone who holds or has held an offshore account that is in any way connected to a loss of UK tax or duties has until 22 June 2007 to notify HMRC of their intention to make a disclosure. If they then make full disclosure, and full payment of outstanding tax, duties, interest and penalties by 26 November 2007, the penalty will be limited to 10% of the amount of previously unpaid tax or duties, rather than a figure normally at least 30% and sometimes as much as 100%.
If the undeclared income or profit amounts to less than £2,500, no penalty will be charged. But HMRC promise that they will investigate those who make no move by 22 June and seek the higher penalties where tax is found to be due.
HMRC undertake to make a final decision on whether or not a disclosure has been accepted as soon as possible and at latest by 30 April 2008. They expect to accept in most cases unless there are material inaccuracies, an investigation is already underway or they suspect involvement in serious organised crime.
For more information, see the HMRC website at https://disclosures.hmrc.gov.uk/oaics . An article explaining how HMRC obtained their powers, and the information on which they are acting, is in the April Journal: read it online at http://www.journalonline.co.uk/magazine/2007/4.aspx .