Tax amnesty? What tax amnesty? Part 4 By Will Heard

Both words seem apt and there are still a few "evaders" out there shopping around if my experiences are anything to go by. I fear some will shop around too long and miss the boat for an extra 20% penalty as a result.
Chip shop owner with £1m using the ODF seems a bit rich ... what about the HMRC prosecution policy? Has it gone completely by the board I have to ask
regards
bill@wamstaxltd.com
http://www.wamstaxltd.com

I take your point David.

Since HMRC has the care and management of the tax system they can decide, in theory, to write off say 200,000 names and addresses as not worth pursuit.

But I am not sure that the few thousand (dis)honest souls who make disclosures will be too happy if they have jumped ship only to find that the others who decided to stay for the ride sail off into the sunset sipping pina colladas on the poop deck.

Some of them might be tempted to have a look at the Human Rights Act and also ask HMRC to explain the concepts of equal treatment for all and "paying the right amount of tax, no more and no less".

If we assume that the vast bulk of offshore account holders will sit on their hands, what are HMR&C to do with those 400,000 names and addresses?

Either they have to devote an awful lot of time following up the non-responders (or a large number of them) or they have to just ignore the information on most of the account holders.

The top brass at HMR&C and their political masters may not find either of these prospects particularly attractive!

HMR&C may be hoist by their own petard. (I love that expression and there has seldom been a more apt occasion to employ it!)

David
www.MLROsupport.co.uk

Will

I think "poop" is the word!

David

"But I am not sure that the few thousand (dis)honest souls who make disclosures will be too happy if they have jumped ship only to find that the others who decided to stay for the ride sail off into the sunset sipping pina colladas on the poop deck."

I can also see visions of those of us accountants who have been proactive in advising our clients to come forward if they have anything to hide appearing like we work for HMRC. As usual the golf club bar will probably provide plenty of examples of those who kept their heads down and got away with it!

I was most impressed by the French bank that explained it was not paying interest on current accounts of non-residents to avoid them any tax problems.

......to agree wholeheartedly with you for once.

You have also raised a very good point.

Although there have been recent cases that appear to curb HMRC's room for manoeuvre when making discovery assessments there is nothing in law to stop HMRC raising S29 TMA 70 assessments. Lack of rescources might still inhibit the wholesale issue of estimated assessments but HMRC could probably do enough to justify the claim of equal treatment for all.

i thought it was actually a 'very slight reduction in the costs you might be caned with if hmrc ever catch up with you'.

Presumably abuse of the english language has spread in to hmrc from Tony's area?

Due to the modest incentives, sadly most evaders will keep skimming along hoping to get away with it. None of the ones i know think they will be caught, which is similar to speeding or drink/driving?

If I was a tax inspector (and there are those who say they are glad I am not) I would look back to the days of estimated assessments from pre-self assessment days and would want to be banging them out in very large amounts to all 300,000 plus addresses that have not replied to this amnesty.

That would set the cat amongst the pigeons.

Richard Murphy

:-)

Low take up so far. This is probably due to the fact that Goverment wastes vast sums of public money every year without ever being held accountable for it. Many Government ministers struggle to retain any credibility, and sleaze permeates all corridors of power. Policies are often ill conceived and dead on their feet just beyond conception. Vast sums of UK money are wasted and nobody is ever held accountable.

So, Mr petit who lives somewhere hilly and grand thinks he may as well take the rough ride through the amnesty and try to break on through to the other side with his bank accounts intact. I think the poor take up on disclosures so far says more about what we think of Government than anything else. It's almost a political issue rather than conscience now, and I am in no way advocating it. Government is simply not trusted to act sensibly with it's revenues. Want a list of examples?

I have just been on CIOT's website (http://www.tax.org.uk/showarticle.pl?id=5632) and have read the letter that will be sent out this week to those individuals that have already been informed by their own bank that they may have a discloseable offshore bank account.

Does anybody know if this letter will be copied to agents where a current 64-8 is lodged? One would hope so but I do not hold out too much hope.

Clearly the big issue for this initiative is that it does not offer immunity from prosecution and the more criminally minded amongst the 400,000 will wait and see what happens as they presumably do not want to be among the probable handful who end up in the dock.

Dave Hartnett's previous in all this has not been mentioned. He led the famous tax prosecution of Ken Dodd (can't remember how many years ago, over 15?) who was acquitted for offences relating to Isle of Man bank accounts when the prosecution failed to persuade the (Liverpool) jury of Ken's dishonest intent.

No wonder he doesn't want to offer immunity from prosecution, what if the diddy men turned up taking advantage of a real amnesty. Not a laughing matter!

One more point, Will's list of useful stats at number 8 should include the following. How many people who join the ODI are registered for criminal enquiries by the HMRC prosecution group and how many convictions result and the same information for those members of the 400,000 who don't sign up for the ODI but are subsequently investigated.

Daniel

There is a copy of the HMR&C final reminder letter on AccountingWEB here .

Perhaps this is a sign that HMR&C are recognising the difficulty we have referred to below!

As for sending copies to agents - you must be kidding!

David
www.MLROsupport.co.uk

The point about the non-interest paying currenbt account is spurious:

1) People don't have such 'holiday accounts'. Please be realistic. Plastic cards mean they are completwely unnecessary.

2) If they don't earn interest on an account there is no issue - they can ignore the letter.

3) The Revenue do have acocunt information - they already know which are the 'big fish'.

Can we locate this discussion in reality?

Richard Murphy

I can see your point Richard,

However! I am sure that a large number of those 300,000 people will be entirely innocent. What about the elderly couple who have a current account overseas for their holidays and it earns no interest? Are you really saying you would want to scare the life out of them by issuing a huge estimated assessment?

Surely thats a little unfair?!

I think that HMRC should investigate each and every case, if people have been as naughty as they seem to think, surely the tax riches generated will be far higher than the cost?!

If HMRC made it public knowledge that they would investigate every single case then maybe there would have been a more productive response from the amnesty!

I have come across cases where the money is deliberately held on current account (and accessed from the UK by ATM) in thge expectation (wrong as it turns out) that this is the best way to hide it.

not only will the banks have provided snapshots of monthly statements to HMRC of offending accounts but HMRC are probably awash with what they call SIPs - standard information packs - with information on the worst candidates just awaiting the 25th June 2007 (if they don't go in on the saturday) to get the best ones taken up.
regards
bill@wamstaxltd.com
http://www.wamstaxltd.com

have been used by some "avoiders" - really evaders - on the guidance of "offshore advisers" and as Will says operate with plastic thinking that they are immune from discovery. They also sometimes even have the cheque book and can access their funds wherever held almost as easily as having a UK bank. Usually however they can't resist getting some interest on surplus funds - tax free - and that is how HMRC will get into the non interest bearing account. Equally they may just use the account to feed their plastic habit. Offshore Investors may ignore the warning letter but if HMRC do their job correctly it is almost inevitable that these head in the sand person's may well be in an even more serious position when the knock comes to the door - Ok realistically the letter arrives through the door
regards
http://www.wamstaxltd.com

I came across an example of a businessman who put money into his offshore account by taking a bag of cash into his local High Street bank and doing a bank credit transfer.

No problem at all (except that the High Street bank filed a suspicious activity report about the deposit with SOCA which alerted HMR&C to the existence of the offshore account).

Result - an invitation to come round for a cosy chat with HMR&C!

David
www.MLROsupport.co.uk

Are we not all very useful tools for cleaning up UKplc? Read the comments below and consider the role of the accountant today.

Yesterday I had a phone call from a very distressed OAP who had received a reminder letter re the Offshore disclosure.

He had had a business years ago, sold up and was advised by someone (not sure whom - before he became my client) to place the monies offshore in the Isle of Man.

He came to me over 2 years ago worried about declaring the interest and wanting advice as to whether he could bring the monies onshore again.

So we declared 6 years back interest , he paid penalties and surcharge etc etc. We declared this over 2 years ago. And he now has no monies offshore.

Perhaps this is why the uptake had been so minimal - they are chasing persons who have already declared!

No , that is not a mistake. A client received a gift from his non domiciled father in Jersey, which was in his bank account there[opened to receive the gift] for a couple of days, and then remitted to the UK. The account was opened in 2006/7.

Of course he received the standard warning letter, to which he could not reply because there is no sender's address!!

This is an exercise in futilty and HMRC sloppiness; the weasel words 'tax due' cover the non domiciled and non resident case where nothing has been remitted, but you try explaining that to dozens of worried non domiciled and non resident clients.

What HMRC have failed to do is even attempt to match their info. from banks with their own records. Without the Revenue's computing power at our fingertips, this matching-however rough and ready-took us only a few minutes.
If the Revenue were not prepared to use such a simple process, the letter should have made that clear, by saying that at the time of sending the letter HMRC have not checked their own records.

Now that would have been a give away, wouldn't it!!

I have just received a phone call from an accountant whose client has just received one of these letters from HMRC. The client concerned has been non resident for many years and has only returned to the UK since 5 April 2007. The accountant had previously told the client that the interest was free of UK tax but the letter made him very nervous!

There is an update on the number of notifications submitted to HMR&C on the BBC News website in an article entitled "Why has tax amnesty fallen flat?".

Apparently up to 19 June there had been 25,000 notifications received.

An HMR&C spokesman is quoted as saying, "It has been slow getting the message across - but we will work though all the cases, whether it takes months or years."

According to the BBC article, Mike Warburton, senior tax partner at Grant Thornton, says the poor response to the amnesty could damage the HMRC's effectiveness.

"The HMRC are going to have to go through with this," he says. "It will bung up the tax system for years to come. Ultimately, this will detract from the service the HMRC gives the public."

David