Tuesday, March 18, 2008

Investors must give offshore account details

Source : Click

Thousands of UK investors identified as having money hidden in offshore accounts have been sent letters asking them to provide details of their finances.

Revenue & Customs has contacted 5,000 British investors requesting a formal declaration of their overseas income and investments.

Not all of those contacted will be liable for a tax charge, but holders of undisclosed offshore accounts who knowingly avoid disclosing information could face a 100 per cent tax penalty on top of payment of tax and interest owed.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said that co-operation would be taken into account when penalties were determined.

A recently released paper from the Revenue estimated that unpaid tax from money abroad totalled £1.5bn in 2005. Most of the money hidden in tax havens is thought to be held in the Channel Islands and Isle of Man.

The Revenue has been tightening its net around offshore account holders following a legal ruling that forced high street banks to disclose information on clients' offshore accounts. A plan to extend this information request to foreign banks has been mooted.

Last year the Revenue held a partial amnesty for British investors with undisclosed offshore accounts, which allowed them the chance to pay the tax and interest they owed plus a reduced penalty of 10 per cent. By the time the amnesty had closed about 60,000 account holders had come forward, and £400m in tax owed had been paid by 45,000 investors.

Gary Ashford, tax investigations director at Grant Thornton, said the Revenue's approach towards offshore account holders was indicative of the increased powers announced in last week's Budget to carry out compliance checks. "Tax evaders had their chance to come clean and pay reduced penalties of 10 per cent last year," he said. "Now, HMRC is playing hardball and will be taking no prisoners."