Accountancy firm PKF has warned that a 'time bomb' finally looks set to go off for thousands of offshore account holders with Sunday's announcement that HM Revenue and Customs will be given up to GBP900m to create a new offshore avoidance team and increase prosecutions for tax avoidance.
PKF noted that in the past, funding problems have meant that the teams working on data obtained from banks have been reorganized every few months resulting in little real progress against determined tax evaders. “This new funding should enable HMRC to finally aggressively pursue those who have spurned chances to use either of the Offshore Disclosure Facility or the New Disclosure Opportunity,” PKF said.
John Cassidy, Tax Investigation and Dispute Resolution Partner at PKF, comments:
“HMRC has built up a mountain of information on offshore account holders over the past three years, but has so far failed to investigate many of the individuals involved. To date, it has just relied on making vague threats and offering tax amnesties to encourage people to come forward voluntarily and pay up what they owe.”
“It remains to be seen how effective the new HMRC team will be, but if it collects anything like the GBP7bn in additional tax revenue that the government is predicting, that means an awful lot of people, who don’t take the chance to put their tax arrears right now, will be paying very large tax bills – and, some of them will wind up in court.”
Ironically, the HMRC crackdown comes as the Liechtenstein Disclosure Facility (LDF) comes into full swing. Those with outstanding tax arrears remain able to establish a Liechtenstein financial asset to settle outstanding taxes with a penalty of 10% applicable. Meanwhile individuals caught by the new team that HMRC is creating, will face penalties of up to 200% on their undeclared offshore income.
PKF noted that in the past, funding problems have meant that the teams working on data obtained from banks have been reorganized every few months resulting in little real progress against determined tax evaders. “This new funding should enable HMRC to finally aggressively pursue those who have spurned chances to use either of the Offshore Disclosure Facility or the New Disclosure Opportunity,” PKF said.
John Cassidy, Tax Investigation and Dispute Resolution Partner at PKF, comments:
“HMRC has built up a mountain of information on offshore account holders over the past three years, but has so far failed to investigate many of the individuals involved. To date, it has just relied on making vague threats and offering tax amnesties to encourage people to come forward voluntarily and pay up what they owe.”
“It remains to be seen how effective the new HMRC team will be, but if it collects anything like the GBP7bn in additional tax revenue that the government is predicting, that means an awful lot of people, who don’t take the chance to put their tax arrears right now, will be paying very large tax bills – and, some of them will wind up in court.”
Ironically, the HMRC crackdown comes as the Liechtenstein Disclosure Facility (LDF) comes into full swing. Those with outstanding tax arrears remain able to establish a Liechtenstein financial asset to settle outstanding taxes with a penalty of 10% applicable. Meanwhile individuals caught by the new team that HMRC is creating, will face penalties of up to 200% on their undeclared offshore income.
