A Government plan to crack down on those who fail to disclose offshore bank accounts has received a ...
A Government plan to crack down on those who fail to disclose offshore bank accounts has received a positive response from both the life and banking sectors.
HM Revenue & Customs (HMRC) announced last month that, for a limited time, people who have failed to pay tax due on money deposited into offshore accounts, and interest earned from them, will be able to use its newly-created Offshore Disclosure Facility.
By making a full disclosure of all undeclared liabilities, penalties will be restricted to 10%. Otherwise, they could be up to 100%.
Simon Hull, managing director of Alliance & Leicester International, said he did not expect the move to have a major impact.
He added it had only received a couple of enquiries from customers following HMRC's announcement. He said: "I am really quite pleased because I think it will legitimise the offshore centres.
"It is like the EU Savings Tax Directive; anything that puts a stamp on it that says we have cleaned it up, just gives us more legitimacy."
Margaret Jago, technical manager at Aegon Scottish Equitable International, said people taking advantage of the amnesty may now look to offshore bonds. She said: "With this latest announcement we believe many individuals will take up the offer to disclose their details and pay the significantly reduced penalty on the tax they should already have paid.
"People taking advantage of this amnesty may wish to consider using offshore bonds as alternative investments to offshore deposits, as offshore bonds offer the advantage of legitimate tax deferral."
Grant Thornton has estimated that HMRC will recoup £5bn in unpaid tax through the intiative, but Gerry Brown, technical manager at Scottish Life International, said he believed it would be much less. He said: "I do not think there is as much dishonest money offshore as some people are making out.
"There is quite a lot of money being held legitimately in places like the Channel Islands with no tax evasion in mind. I remain to be convinced that the Revenue is going to get billions."
Paul Roberts, tax investigations partner at Grant Thornton, said disclosure under the initiative would be complicated. He said: "It does appear that HMRC expects the initiative to create a lot of work and that if taxpayers make a genuine effort to disclose reasonably accurately then it will accept their disclosures. However, disclosures can be complex, particularly for those disclosing for several offshore assets as individuals will be required to submit several disclosures."
HMRC must be notified of an intention to make a disclosure by 22 June, and all taxes, duties, interest and penalties must be paid by 26 November.
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