News Item
Tax Amnesty on Offshore Accounts
HM Revenue & Customs have announced an “Offshore Disclosure Facility” for individuals who have held or currently hold an offshore account, either directly or indirectly, that is in any way connected to loss of UK tax and/or duty.
Terms of the Offshore Disclosure Facility:
Notify HMRC of the intention to make a disclosure by 22 June 2007.
- A fixed penalty of 10% of the tax/duties underpaid.
- No penalty on disclosures of untaxed amounts totalling less than £2,500.
- Certainty of treatment throughout – The rules and timetables are known in advance.
- Disclose with full payment of tax, duties, interest and penalties before 26 November 2007.
- A final decision from HMRC on whether or not the disclosure has been accepted by 30 April 2008.
Under the Offshore Disclosure Facility HM Revenue & Customs have confirmed that rather than seeking a punitive level of penalties that could be up to 100% of the undeclared liabilities, they will restrict the penalty to a maximum of 10% (in addition to paying the total tax and interest due).
To take advantage of the Amnesty individuals must notify HM Revenue & Customs of their intention to make a disclosure by 22 June 2007.
The full disclosure of the previously undeclared income and payment of the subsequent taxes, duties, interest and penalty must be made by 26 November 2007.
Anyone who does not take advantage of the Amnesty and is subsequently found to have had income arising from an offshore account will be liable to a minimum penalty of 30%.
In most cases, income and gains arising from overseas are taxable in the UK. Individuals who are not resident or ordinarily resident in the UK or are domiciled outside the UK may not have any tax liabilities on offshore income or may only be liable on monies remitted to the UK. This allows for tax planning opportunities for those with overseas connections e.g. if their father is domiciled outside the UK, they may also be domiciled outside the UK and therefore not may not be liable to UK tax on overseas income.
HM Revenue & Customs have also indicated that individuals who do not have offshore accounts, but do however have undeclared income, and they make a full disclosure and payment within in the same terms, that they will be treated in the same manner.
If you wish to obtain more information on the Offshore Disclosure Facility or overseas tax planning opportunities you can contact either Duncan Graham (duncangraham@johnston-kennedy.com) or Patrick Towe (patricktowe@johnston-kennedy.com)
Further information on the Offshore Disclosure Facility can also be found at https://disclosures.hmrc.gov.uk/oaics/