Tax
UK Tax Authority Opens New Amnesty To Tempt Back Offshore Funds
HM Revenue & Customs, the UK tax authority, has launched a new disclosure initiative allowing those with unpaid taxes on offshore accounts or assets to settle their tax bill at a reduced penalty rate.
Under the New Disclosure Opportunity, which runs from 1 September 2009 to 12 March 2010, those who make a “complete and accurate disclosure” of their offshore holdings will qualify for a 10 per cent penalty charge, HMRC said in a statement.
Those not making use of the NDO who are subsequently found to have undeclared tax liabilities will likely face a 30 per cent penalty – along with an increased risk of criminal charges.
Dave Hartnett, HMRC’s permanent secretary for tax, urged taxpayers to make use of the NDO as “this will be the last opportunity of its kind”, and particularly pointed to those who might now regret not taking advantage of the previous Offshore Disclosure Facility.
HMRC ran its ODF from April to November 2007, writing to offshore investors to offer a 10 per cent penalty rate. Those who declined to disclose their assets then but who now wish to come clean through the NDO will be subject to a 20 per cent penalty, a rate which HMRC said “is more favourable than normal while demonstrating that special rates once declined are unlikely to be repeated.”
Andrew Watt, managing director of tax disputes and investigations at Alvarez & Marsal Taxand, is also urging those eligible to take advantage of the new initiative. “The NDO provides a good option for companies and individuals with a disclosure to make as they will benefit from a much more favourable penalty. This is the last time companies and individuals will be able to disclose their unpaid tax on such favourable terms,” he said.
According to Mr Watt, the NDO is likely to raise £1 billion of tax revenues - giving a badly needed boost to the Treasury’s coffers.
The financial crisis has left cash-strapped governments keen to recover tax revenues from offshore accounts and HMRC’s announcement follows news earlier this month that the Italian government is planning its third tax amnesty in nine years.
The Italian amnesty – which is planned to run between October this year and April 2010 if granted parliamentary approval – will impose a 50 per cent tax on interest received from repatriated offshore funds, assumed to be two per cent annually over the past five years.
