In a somewhat expected turn of events from HMRC, their tax amnesty on disclosing offshore bank accounts has been extended.
The dramatic change of heart comes shortly after Dave Hartnett, permanent secretary for tax, released a video on YouTube insisting that the November 30th deadline was the very last chance for taxpayers to voluntarily disclose offshore bank account information.
Hartnett had declared that HMRC were taking a very tough stance and would not be giving taxpayers any more chances.
However, that deadline has now been extended to January 4th 2010.
This is now the new date by which UK taxpayers who have failed to pay tax on any offshore savings or investments must show they will pay up.
HMRC have publicly stated that the decision was made in order to give banks more time to contact their customers.
However, this just seems to be an excuse as surely the whole point of the New Disclosure Opportunity (NDO) is that taxpayers are required to disclose the information themselves – after all, it is their personal responsibility to pay their own tax.
It is widely believed that this latest move is a direct result of a poor response to the campaign.
“We know that some bank customers will not be contacted by their banks in good time for the original deadline of 30th November so in the interests of fairness we have decided to extend our deadline by a month to 4th January.
The new disclosure opportunity is voluntary but from the start of the New Year we will begin to investigate those who were eligible to use the NDO but instead buried their heads in the sand” stated Hartnett.
Payments of any unpaid tax must be made by 31st January if the disclosure is made on paper, and 12th March if made electronically.
In early November, 30,000 taxpayers were sent ‘warning letters’ in a bid to get them to admit to any unpaid tax or offshore savings.
HMRC has not yet finished obtaining information from all of the 308 banks they have permission for, meaning that thousands more taxpayers are expected to come to their attention.
The incentive for taxpayers to come forward is that the penalties they face will be limited to just 10% as opposed to penalties of up to 100% if they fail to make a full confession.
Although the penalties would be reduced to 10%, tax dodgers would have to pay tax, plus interest going back to April 1988.