Last chance to admit to your offshore income
Tax joins the YouTube phenomenon.
The current tax amnesty (closing November 30, 2009) sees the head of HMRC Dave Hartnett posting an explanatory video on YouTube.
I am pleased to say that I beat him to it – having predicted the amnesty in my own YouTube video posted in June.
Now that the full details are available about the tax amnesty I have posted a fresh video on www.youtube.com/HustonTV .
So what’s all this about?
Lots of people across the UK have failed to declare some money they stashed away offshore. Popular places were Jersey and the Isle of Man, though some people went further afield to the likes of Liechtenstein and Switzerland. In my experience most of this was done in the 1980s and the people tend to be in their 60s or older by now. Many are retired from business.
The problem is this. HM Revenue and Customs in the summer of 2009 obtained legal authority to approach over 300 banks and obtain details of UK people who have (or had) savings in accounts offshore.
If you have had savings outside the UK in the last 20 years, and have not paid the right tax on it, then you need to read on.
HMRC has announced what they say is a final chance to clean up the matter before they start to get heavy. Up to November 30, 2009 you have the chance to register under what is called the New Disclosure Opportunity – or NDO. This gives the ability to submit a disclosure to HMRC of any income you had not declared (so long as at least some of what you owe is offshore). If, once you register, you find that all your taxes were correct after all, then there is no need to go on to make a disclosure.
Just as in 2007, when there was a previous initiative, this is your chance to tidy up your tax affairs and pay a low penalty – just 10% of the tax owed. You will also have to pay the tax plus interest from when it should have been paid originally.
The great thing about the NDO is that chances are your figures will be accepted without any further enquiries from the tax-man. This is in stark contrast to the normal situation when you are caught fiddling your tax.
On the other hand anyone who fails to register in November 30, 2009 will not be able to make a disclosure under the NDO. If they tell the tax people about undeclared income they can expect some further level of enquiry into their affairs. They may even have a full-blown investigation.
What are the HMRC’s plan?
1. Obtain details of hundreds of thousands of offshore bank accounts.
2. Allow people to confess via the NDO – if they register by November 30, 2009.
3. After November HMRC has the names of people with offshore accounts but who have not registered to confess via the NDO.
4. Over the next few years HMRC will investigate those people who did not come forward.
Some of the more serious cases of people who do not come forward will face prosecution, and could even go to jail. That depends on a lot of factors.
The only sensible course of action if you have had money offshore and not paid the right tax is to register under the New Disclosure Opportunity. This can be done via HMRC’s website at http://tinyurl.com/ye2d8ex
You should speak to a tax consultant or accountant and that way get professional help in registration and the eventual disclosure. Don’t worry if you do not have all the bank statements etc. An experienced tax consultant will be able to use their judgement to help estimate what tax you owe, and then fill in the forms.
The finalised disclosures need to be submitted early in 2010. Paper disclosures must be in by January 31, 2010, as must the payment of what you owe. If putting the figures in online then you have until March 12, 2010 but delaying paying until March will mean you pay more interest. I suggest you try to have it all sorted by January 2010.
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.