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The government are launching a campaign designed to crack down on people who have been evading taxes by holding money in offshore accounts.

Chancellor George Osborne has said that the campaign aimed to make it “very clear” that if people have hidden money offshore “then we are coming after them”.

Anyone found guilty of tax evasion could face fines of 200% of the tax owed and the possibility of criminal prosecution and imprisonment.

“Ultimately, this is about fairness,” said Mr Osbourne. “People have to pay their taxes.”

If you have hidden money offshore to avoid tax payments then now is the time to confess, rather than just hoping that this will all go away…because it won’t!

There are many different ways of admitting this to HMRC.

One option is to write to HMRC and tell them everything, which might be your best route, or use one of the disclosure opportunities that they have recently announced.

Both of these have merits, but the only real way to decide the best option for you is to calculate what needs to be disclosed.

Once the calculations have been done – and it is rarely as bad as you think – the next stage is to decide how this information is to be disclosed to HMRC.

There are a number of different disclosure opportunities available. Some of which are targeted at particular businesses, such as the let property campaign which offers landlords the chance to review and update their tax declarations, and offshore disclosure facilities which allow people who have undeclared UK taxes on foreign assets to bring their tax affairs up to date.

The main advantage of disclosure facilities is that the interest and penalty is guaranteed to be significantly reduced – typically 10-20% – from the maximum penalty of 100% (or 200% in extreme circumstances).

The disclosure facilities also come with a guarantee that once HMRC accept that everything has been disclosed you will not be subject to prosecution. The Liechtenstein Disclosure Facility is one such facility that does this. But, you should also consider that if HMRC prosecuted someone who had used a disclosure facility that does not include this level of protection, then it is highly unlikely that anyone would contemplate using it in the future.

Another benefit of some disclosure opportunities is that the scope is significantly reduced to specifically target the last six years, even if the issue has existed for a greater period. In other tax cases, HMRC are able to review up to 21 years so this is an incredibly useful element.

In the events that your circumstances are not compatible with the disclosure facilities available then you are left with two choices. The first is to keep quiet and pray that nothing happens – not a great idea! – or you can write to HMRC and reveal all. If you choose the first option and HMRC discover your misdemeanours, the best you can hope for is that they give you a substantial penalty and decide against prosecution. If you choose the second option, there is a minute chance that HMRC may still prosecute you, but the possibility of this is significantly reduced and the penalty will be substantially lower.

Being able to negotiate with HMRC is a crucial aspect of determining the level of penalty that you end up paying, so it is important that you have years of experience on your side.

If you are concerned about your tax affairs and potentially need to declare something to HMRC, contact a company like KinsellaTax who are experienced in dealing with tax disclosures and investigations.

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