Only a very small number of the 20,000 UK residents with off-shore accounts have come forward and declared their interests to the Inland Revenue according to a report in the Sunday Telegraph. This will leave many, if they get caught with steep fines and penalties. The government believes there is some Â£2 billion to be harvested from these accounts. They had hoped to raise Â£500 million of it by offering an amnesty, which ends at midnight on Monday 4th January 2010, allowing people to come clean and cough up what they owe with fines limited to 10% of unpaid tax.
After this time limit, a ‘line in the sand’ as far as HMRC is concerned fines can be between 30% and 100%, with the most serious cases facing prosecution as well.
From Tuesday Dave Hartnett and his team of 20 tax enforcers will begin tooth-combing the records on such accounts taken from over 300 banks looking for unpaid tax. Mr Hartnett said that some people are ‘going to end up in tears’ because they do not think they will be caught. I would think a lot of financial advisors are going to end up in tears over this too! Some of them belonging to many of the banks concerned.
Banks and clients have been fighting the new powers HMRC have for getting this information from banks with a UK presence on confidentiality grounds, but so far to no avail.
The government now need every Sov they can get, so will go after these people with a vengeance. Not just to get their money today but also 'pour dis-courager les autres’.
According to the Financial Secretary to the Treasury, Stephen Timms the use of offshore funds to evade tax is illegal. As far as I am concerned all tax evasion is illegal, that includes politicians evading capital gains tax by flipping houses.