Her Majesty's Revenue and Customs (HMRC) is set to launch a second offshore amnesty after overestimating the amount it would recover from its first tax reprieve scheme, according to Grant Thornton.
The adviser firm says HMRC has targeted a further 150 financial institutions for customer details after falling significantly short of the billions of pounds it was expecting to recover from its first amnesty.
Earlier this year, following requests for information from high street banks, HMRC offered a short window of opportunity – the Offshore Disclosure Initiative - for taxpayers to disclose information left off their tax returns.
The carrot for taxpayers to come forward was that if they provided information by 22 June and go on to pay any tax due in full by 26 November, they will not be hit with severe additional penalties.
All unpaid taxes, over £2,500, will be charged a 10% penalty, considerably less than the usual 30%.
Gary Ashford, tax investigations director at Grant Thornton, says while it is likely there will be a late influx of payments this month from those wanting to avoid the heavier penalties, HMRC will be somewhat disappointed with the amount of revenue generated.
“It was initially thought billions could be recovered. It's now likely to be more like millions that will surface,” he says.
“It may even be a case of HMRC having overestimated how many people hold undisclosed offshore accounts.
“However, it looks like HMRC are about to embark on a second amnesty. They are already targeting another group of around 150 financial institutions in a bid to gain customer details.
“Given the existing legal rulings on the large banks it seems likely that HMRC will be successful in obtaining customer information relatively quickly.
“HMRC is determined to make examples of tax dodgers but will be looking to encourage them to disclose as they did with the Offshore Disclosure Initiative.”
Whatever the case, Ashford says those who have yet to come forward to do so or risk hefty tax bills.
He says: “One hears of anecdotal tales of individuals moving their funds to ever more exotic locations to avoid HMRC, but given the international cooperation taking place between tax authorities in relation to the exchange of information, it seems only a matter of time before the taxman catches up with them.”
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