Act now to avoid offshore account penalties

Offshore account holders with undeclared assets will be aware that they had until 30th November 2009 to notify HMRC of their intention to disclose in order to avoid a detailed investigation of their tax affairs and possible prosecution.

“An amnesty was declared in August in respect of all previously undeclared offshore assets, with over 300 banks ordered to provide details about customers who hold offshore accounts” explains Judy Curtis of Barr Ellison’s tax team. “However, it is important to remember that as well as notifying HMRC by 30 November offshore account holders must now make the disclosure on paper by 31 January 2010 or on-line by 12 March 2010.”

Disclosure normally carries a 10% penalty, although no penalties are charged where tax is less than £1,000. However, anyone who received a letter from HMRC under the first offshore disclosure opportunity will face a 20% penalty. Full payment of tax, interest and penalties must accompany the completed disclosure. Disclosures can cover a maximum of 20 years.

Adds Judy Curtis: “It’s vital that account holders do disclose fully because the consequences if they don’t could be quite severe. Agents can make disclosure on behalf of clients so we are very happy to talk to any clients who are unsure about how to proceed.”  Penalties for non disclosure could include: a detailed investigation of all tax affairs; significantly higher penalties, which could be up to 100% of the tax payable; prosecution and naming and shaming on the Revenue’s website.

HMRC announced its first offshore disclosure opportunity in 2007 when approximately 40,000 taxpayers made a disclosure raising additional revenue of approximately £400M at a cost to the Revenue of less than £10M. This first offshore disclosure opportunity concentrated on information obtained from five main UK high street banks. HMRC says it expects 50,000 disclosures and approximately £500M in tax, interest and penalties this time round.

HMRC have stated that there will be no further amnesties.

For further information contact Judy Curtis or Denise Macrow on 01223 417200.

The information given in this article is of a general nature only and should not be considered as advice applicable to any particular situation for which specific request should be made to us.

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