Offshore tax evasion was branded ‘morally unacceptable’ by Stephen Timms, the Treasury Minister after Her Majesty’s Revenue and Customs (HMRC) announced that approximately 10,000 people came forward to declare money in offshore accounts before the UK tax amnesty deadline last week; Monday 4th January 2010.
Mr Timms said:
“Hiding money in offshore accounts to evade tax is economically and morally unacceptable. It robs public services of funding and places an unfair burden on the honest majority of taxpayers.
Some people will still be tempted, and that is why the Government will bring forward measures during 2010 to build on the significant progress made both in the UK and globally during 2009 in closing down offshore tax evasion for good.”
Under the rules of the amnesty, launched in July 2009, those who came forward voluntarily must now pay any unpaid tax, plus interest and a 10% penalty.
Those who have not come forward however, face a lengthy tax investigation, penalties of up to 100% of the tax due, risk being publicly ‘named and shamed’ and possibly even prosecution.
New maximum penalties of 200% could be brought in during 2011 if the Finance Bill is enacted following the 2010 Budget.
HM Revenue and Customs say they are now acquiring data on offshore accounts requested from over 300 banks in countries worldwide.
Roughly 100,000 people are believed to have offshore income. HMRC have stated that they expect to raise £500 million over 3 years as a result of those who came forward and much more from those who did not.
In 2007, a similar disclosure opportunity raised £450 million from 45,000 people.
It is widely believed that the taxman extended the original deadline of 30th November 2009 because so few people had come forward. It is alleged that more than 1,000 of those who came forward did so on 4th January itself.
Although HMRC admitted that the process of chasing up those who had not come forward would be expensive and take months or even years, they claim they are not disappointed with the numbers of voluntary disclosures as the current scheme had dealt with much more niche banks with a much smaller client base than in 2007.
HMRC added that people who had not yet disclosed offshore accounts should still do voluntarily rather than waiting for HMRC to investigate them as volunteering information is still likely to produce a lower penalty than if caught out.
There has been an international crackdown on tax evasion via offshore accounts since the G20 summit in March last year when the Organisation for Economic Co-operation and Development pledged to create greater tax transparency around the world.