As HM Revenue & Customs receives the final payments from the Offshore Disclosure Facility - the so-called "amnesty" for offshore bank account holders - earlier this year, accountancy firm PKF has criticised plans for an identical second "amnesty" next year.
Under the ODF, those who owed UK tax on offshore bank accounts could pay the tax, interest and a 10% penalty and avoid stronger penalties from HMRC at a later date.
John Cassidy, tax investigations partner at PKF, said: “There would be no logic to setting the penalty for a second ODF at the same 10% level and still allowing those who ought to have come forward the first time to use the new facility. Where is the incentive to come forward now rather than wait until a later exercise? There is a serious danger that such exercises will stop being taken seriously if they happen every year without change.”
Instead, he said, HMRC needs to incentivise people to come forward, perhaps by limiting the period for which back tax needs to be calculated. The current requirement to calculate and disclose unpaid tax going back as far as 20 years could deter investors who do not have records going back that far from using the facility, opening them up to tougher penalties.
Cassidy added: “Reducing the length of time to be investigated to six years, perhaps counterbalanced by a different penalty structure, would provide a much greater incentive to people, which is the key issue. The more people come forward, the more tax arrears HMRC will collect – it should give more to get more.”
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