April 2007

TAX AMNESTY

HM Revenue & Customs have announced a “tax amnesty” for offshore account holders. Holders who have evaded tax on their offshore bank accounts and have until 26 November to pay up.

Under the amnesty, investors with offshore accounts have until June 22 to register an intention with the Revenue to make a disclosure of any tax due. Customers can register at an HMRC website or via a telephone. They then have five months to submit the disclosure and pay.

Payments will have to include the full tax and interest but penalties will be set at 10%. Those who continue to evade the tax liability will face a higher penalty up to 100% of the tax owed.

About three million people have offshore accounts, with a total value of about £180bn. These are typically run from the Channel Islands, Ireland and the Isle of Man.

One of the main benefits of these accounts is that the interest is paid gross rather than with basic rate tax deducted.

The Revenue is expected to come down hard on investors it believes are guilty of avoidance. It is set to carry out detailed investigations and those who are proved to have avoided paying tax face tough penalties including prosecution. Banks and building societies will be ordered to give the Revenue the names of more than 100,000 customers with offshore accounts.