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Offshore tax evaders: 'Be afraid', warns Dave Hartnett

21st Dec 2009
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CIOT quizzes HMRC’s permanent secretary for tax over disclosure facilities.

“The world is getting smaller”, warned Dave Hartnett recently in a Q&A session with the Chartered Institute of Taxation, and from January, there will be fewer places for tax evaders to hide.

In a podcast available for download on the CIOT website, HMRC’s permanent secretary for tax took questions from John Whiting, CIOT tax policy director and Gary Ashford, chairman of the institute’s management of taxes sub committee.

“We’ve been surprised that some people seem determined to frankly hold out and not make a disclosure when they can see announcements that have been made of penalties for incorrect tax returns, and that some of them will face a penalty of 100%”, warned Hartnett.

 “We needed to make things more secure from a tax administration perspective going forward, and our ministers accepted that argument, so people are going to have to make a notification going forward of an offshore account which hits £25,000 balance or is newly opened with that sort of money. Now people who don’t do that and whose tax returns are wrong will face a penalty of up to 100% of the tax for not notifying us, plus up to 100% of the tax for an incorrect return. That’s a big penalty”.

What happens after the January deadline?
“For the time being, those letters [about disclosure] will be very friendly, very warm, letting people know we’ve got information about them... But I think once we get past the time for people to come forward, those letters are much more likely to be invitations to interviews, and meetings to discuss the accuracy of tax returns”, said Hartnett.

He also revealed that by the end of March HMRC would begin risk profiling individuals to look at where significant disclosures should have been made: “I think people will then see a growing number of investigations”, he confirmed.

More Liechtensteins
Hartnett also hinted that the Liechtenstein facility could be repeated elsewhere: “We are in discussion with other countries. Would we give them exactly the same terms or seek to negotiate exactly the same terms? It really depends on two things. Have we got any levers that would allow us to gain access to banking data in those countries? That’s the first consideration. If the answer is no, there are none at all, well we’d think hard about what to do.

“What we don’t want to do either is to undermine the Liechtenstein disclosure facility by suddenly giving someone a choice between the Liechtenstein facility, and – I’d better not name any countries – say, the ‘Ruritanian facility’”.

Commenting on the session, Gary Ashford said: “This is the clearest and most direct statement to date from Dave Hartnett as to how HMRC are going to view undisclosed offshore bank accounts after the new disclosure opportunity comes to an end.”


Replies (1)

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By User deleted
21st Dec 2009 12:05

The trouble is...

that the Liechtenstein facility offers very relaxed terms in comparison with the NDO and it appears that with more Liechenstein opportunities in the offing people can see the benefits of waiting.

The new accounts disclosure requirement is a step in the right direction but it seems to be a case of trying to shut the stabble door long after the prize horse has disappeared.

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