HMRC Tax Amnesty – Undisclosed Income/Gains UK or Worldwide

Notification Deadline 22^nd June 2007

As you may have seen in the press, HM Revenue & Customs announced a scheme last week that allows those who have held offshore bank accounts on which they have not declared interest earned for tax purposes to do so with significantly reduced penalties being due.  Somewhat less publicity has been given to the fact that anyone who knows they have made an error on a past tax return which has resulted in less tax being paid than was really due can also make voluntary declaration of that fact at the moment and enjoy the same reduced penalty rate.

If however you have had an offshore bank account on which you have not declared the interest or there are other tax issues you wish to declare and have not previously done so then the current ‘amnesty’ gives you an opportunity to do so relatively straightforwardly, with lower accounting costs being likely than normal and with a much lower rate of penalty being due on any unpaid tax at just 10% compared to 30% - 50% which is likely after the ‘amnesty’ is over.  [I should add that if your offshore account was with Lloyds TSB, Barclays, HSBC, HBOS or RBS / Natwest then it’s highly likely that the Revenue already know about it, and they will pursue you if you don’t voluntarily declare the tax you owe now.]

Broadly, the terms of the facility are as follows:

·       Those wishing to use the facility should notify HMRC of the intention to make a disclosure by 22 June 2007 .

·       There will be a fixed penalty of 10% of the tax/duties underpaid.

·       There will be no penalty on disclosures of untaxed amounts totalling less than £2,500.  (Tax and interest still need to be paid).

·       Certainty of treatment throughout – taxpayers will know the rules and timetables in advance.

·       The taxpayer will disclose the with full payment of tax, duties, interest and penalties before 26^th November 2007 .

·       HMRC will issue a final decision on whether or not the disclosure has been accepted as soon as possible and by 30^th April 2008 .

·       It is expected that most voluntary declarations made under this scheme will be accepted without further enquiry being made.  If, however, your disclosure suggests more serious tax issues have arisen or that another crime has taken place then the Revenue have given no undertaking not to pursue the matter further.

In order to take advantage of this facility, there is a set procedure and a tight timetable.  If you are in this situation, or know of anyone who is, please contact me as soon as possible, but in any event before 31^st May 2007, in order to ensure sufficient initial reviews can be undertaken to meet the 22^nd June 2007 notification deadline.

There is also a similar, parallel, procedure for dealing with the reporting of previous under declarations which do not have any offshore connections.

For advice or help on this article contact Steve Cook , Tax Partner at Steve@nunn-hayward.com or call on 01753 888211.