Tax Research UK

Storm over tax ‘amnesty’ security checks - Tax, Money - The Independent.

Storm?

Come on - actually a form trying to make excuses as to why the amnesty should not work.

So one or two names will be listed that should not be. Yes, that’s an issue. And at some time in the future they may get a letter asking why they have not followed up. To which the answer will be a copy of this article.

This storm fails to make tea cup status.

Richard Murphy Amnesty, HMRC

Is HMRC Getting Desperate in Tax Haven Clampdown?.

“Shlter Offshore” - unsurprisingly - says it is, but the telling line is:

The truth of the matter, according to some financial experts such as Ronnie Ludwig, partner in the private wealth group at Saffery Champness, is that HMRC is stretched to the limit in terms of staffing and resources, and just cannot chase up those with unpaid tax.

I know that’s true.

So for heaven’s sake stop the staff cuts HMRC.

Spend more on tax collection now! PLEASE!

Richard Murphy Amnesty, HMRC, Tax management

HM Revenue & Customs (HMRC) has confirmed the details of a new disclosure initiative that will allow people with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities at a favourable penalty rate.

Under the New Disclosure Opportunity (NDO) people who make a complete and accurate disclosure between 1 September 2009 and 12 March 2010 will qualify for a 10% penalty. Those who choose not to take this opportunity and are subsequently found to have undeclared tax liabilities are likely to face a 30% or higher penalty and also run an increased risk of criminal prosecution.

The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said:

I would urge anyone with offshore accounts holding untaxed income or gains to take advantage of this simple and straightforward scheme. Most offshore investors already pay the tax that the law requires and it’s only fair that everyone respects the rules. Tax evasion is not a victimless crime. It deprives our public services of vital funding and places an unfair burden on the honest majority of taxpayers.

Dave Hartnett, HMRC Permanent Secretary for Tax, said:

This will be the last opportunity of its kind.

I said:

I don’t like ‘tax amnesties, but pragmatically accept he need for this final attempt to crack down on secrecy jurisdiction cheats. Once this opportunity has closed I hope HMRC then:

a) prosecute those institutions hat facilitated these crimes

b) dedicate the necessary resources to a massive crackdown on remaining cheats on whom they hold information

c) name, shame and pursue with vigour those professional people associated with this trade

Only then will justice be done and be seen to be done.

The last quote got left off the official press release.

Richard Murphy Amnesty, HMRC

The budget says

Offshore disclosure

A New Disclosure Opportunity (NDO) for holders of offshore accounts will run until March 2010. This will give holders of these accounts the opportunity to disclose, of their own accord, if they have unpaid tax or duties and to settle debts. HMRC is also seeking to issue notices requiring financial institutions to provide information about offshore account holders.

I’m trying to find out what the conditions attached to the scheme will be.

The sting is in the tail of the report – HMRC is trying to get the data from those who operate such facilities.

Interesting though that it is still ‘seeking’ to do so – they are resisting.

The dedication of the banks and tax havens to promoting tax evasion remains clear.

Richard Murphy Amnesty, Tax Havens, Tax evasion

Accountancy Age has reported:

The second tax amnesty for holders of offshore accounts will impose penalties significantly higher than the first scheme, Accountancy Age has learned, with experts expecting HM Revenue and Customs to treble the charge to 30% of the outstanding tax.

A source close to the planning of the amnesty said that it is ‘highly unlikely’ the same 10% penalty will apply to the second round of disclosures.

Quite right to.

They’ve had one chance.

The second can’t be as good or we will create perpetual ‘moral hazard’.

Richard Murphy Amnesty

Accountancy Age has been digging about the prospect of another UK tax amnesty. The last only really affected the activities of the UK’s five biggest banks - Barclays, Lloyds, HBOS (as was), HSBC and RBS. It successfully showed the massive support they provide to those who evade their taxes using the Crown Dependencies - for which they deny any responsibility and which they fought long and hard to hide on behalf of those who were breaching UK law - but it also left out vast numbers using other banks and more specialist organisations.

So, amnesty number 2 is on its way. As the Age says:

As many as 500 financial institutions will receive letters from HM Revenue & Customs by the end of March asking them to disclose details of UK taxpayers with accounts held offshore, Accountancy Age has learned.

According to a source familiar with the plans, contact with the banks would be the first stage in offering tens of thousands of account holders the opportunity to come clean, through a second offshore disclosure facility or amnesty - on the funds they are holding overseas.

And as they also report:

According to Richard Murphy, tax campaigner at the Tax Justice Network, Swiss investment bank UBS could be a top target for HMRC after US authorities imposed a $780m (£537m) on the bank for failing to disclose the details of account holders.

Several tax experts told Accountancy Age they expect HMRC to target customers of Swiss and private banks, including SG Hambros and Credit Swiss.

They got a comment from Jersey as well:

Robert Kirkby, technical director at Jersey Finance, a government association for banks trading on the island, said HMRC could not be ‘too aggressive with a second amnesty’.

Or in other words “please be kind on our poor criminal clients”.

And as the Age reported elsewhere:

The taxman is expected to use powers to parachute in investigators to question officials in tax havens, experts believe, as part of plans for a global clampdown on offshore tax jurisdictions that is due to be announced at April’s G20 summit.

I am sure this is true, but let’s be clear - this gives me big concerns about over stretched resources.

If we want to know how to pay for the bail out the answer is easy to find: recruit to the Revenue.

Richard Murphy Amnesty, Banking, Guernsey, Isle of Man, Jersey, Switzerland, Tax evasion

Last year’s ‘tax amnesty’ in the UK worked: about 45,000 people who had hidden cash in tax havens paid up. Almost 20,000 more declared they had such cash and then did not pay. It’s believed more than 30,000 others were written to and did not respond.

But the amnesty dealt with customers of just five banks - Barclays, HBOS, Lloyds TSB, HSBC and Royal Bank of Scotland (including NatWest). OK, they’re important, and as I’ve repeatedly stressed here, all have knowingly harboured tax evaded funds in the Crown Dependencies and elsewhere, but if you were really serious about abusing the system it was unlikely you were going to put your money with some of the better regulated (if we can assume that not declaring suspicion of money laundering implies that) organisations. You would be much more likely to use some of he dodgier organisations and banks that populate the tax haven world.

And now HM Revenue & Customs is going to flush out customers of the other banks. The Sunday Times has revealed that the Revenue is going to offer another amnesty. It looks unlikely to apply to anyone already contacted, which seems absolutely appropriate. And it looks likely that it will only apply until the Revenue have secured customer details from an estimated 117 foreign and UK institutions working in the Crown Dependencies and, maybe, other European havens.

Dave Hartnett, the Revenue’s acting chairman, is the man behind the move (again) and has promised that the arrangement will be more complicated tan last time. It has to be: this is the second time of asking and so it cannot be as generous as the first offer was. I can already as a result hear the howls of protest from the tax profession at how unfair this will be. My answer is simple: criminals who are being offered the chance of a lower sentence are not in a position to complain. And let’s be clear, it’s criminality we’re talking about here. As Dave Hartnett has said:

Some people will go to jail - I have no doubt about that, for example where they have lied to us during a previous investigation. We do not tolerate that at all.

So don’t expect a fantastic deal, more like a get out of jail on payment of a moderate fine card. Which I can live with.

But let’s add three things:

1) Given the scale of this there is no way that the Treasury Select Committee can conclude that tax havens are not a threat to the UK;

2) Given the knowing involvement of so many financial institutions in this criminal trade there is no way they can survive without changes in their regulatory regime;

3) Deloittes, PWC, HSBC and Citi mislead the Treasury Select Committee when they said there was no serious offshore problem in July. There clearly is. So why did they say what they did?

It’s time for them, as well as dishonest taxpayers to come clean.

Richard Murphy Amnesty, Corruption, Tax Havens, Tax evasion

The Times has reported that:

HM Revenue & Customs has clawed back £400 million from people with offshore bank accounts after it granted a partial amnesty.

The holders of about 45,000 offshore accounts, many of which are in tax havens such as Guernsey and Jersey, owned up to unpaid tax bills before the November 26 deadline, thus capping their fines at 10 per cent. The largest single payment amounted to £3 million, with the average being £9,000.

And what have the critics said? That:

this is a far cry from the £1.75 billion that HMRC estimated it was owed by customers of up to seven high street banks that were forced to hand over account details.

I don’t agree. This the start. These were the easy pickings. There are 150 banks still to tackle - and they’re likely to have been used by the more sophisticated (or shall we say ‘dubious’ players). In addition, the big money has probably gambled on not declaring.

This is a good start of a programme which I think a massive success for HMRC.

Richard Murphy Amnesty, Corruption, Tax Havens, Tax management

The PWC web site (which is well protected by passwords - heaven knows why) has the follwoing to say this week on action needed on the UK tax amnesty:

The period allowed to notify the intention to disclose information on offshore bank accounts under the Offshore Disclosure Facility (ODF) ended on 22 June 2007 with a flurry of last minute activity. By close, HMRC had received 60,000 notifications, some 40,000 less than the 100,000 taxpayers that HMRC had privately estimated have a problem.

How accurate is the 100,000? It is difficult to say without knowing what assumptions have been made. However it does appear reasonably conservative, given that HMRC has said that it sent letters to 400,000 customers of the offshore branches of Barclays, HBOS, HSBC, RBS and Lloyds TSB.

Why would there be a discrepancy between those that HMRC are aware have a problem and those that have notified? Inevitably there will be some that will not come forward whatever the incentive, either through fear or just an unwillingness to hand over money to the authorities. However, the discrepancy is too large for just this to be the answer.

We believe that there are also a large number of people that are playing the odds - they have looked at the limited benefits of the ODF and have decided that they would prefer to take the chance that they will not be caught. They will take comfort from the numbers that have not come forward and from what they perceive to be limited HMRC investigative resources.

These people are of course ill-informed and face a far greater risk than an increase in the amount of their civil penalty.

That’s a sober assessment of the situation. I am sure there are 40,000 people out there who chanced this. I believe the Revenue think that too. Maybe PWC have been talking to the same people as me, but I also agree with this comment:

Firstly, let’s consider the chances of not being caught. HMRC has thousands of trained investigators in local offices that have been frustrated over the last few years by being fed poor quality cases by their risk and intelligence teams. These now have the opportunity to access hard evidence of previously undisclosed offshore accounts. From our discussions with ex-colleagues within HMRC it is clear that they cannot wait to get started.

Life is going to be tough for these people. And so it should be.

My recommendation? Own up now even if you missed the deadline. There’s some chance the Revenue will still play ball. You certainly can’t lose. Again, I was pleased to see PWC say much the same.

Richard Murphy Amnesty, PWC

Accountancy Age reports that:

The taxman is preparing to launch enquiries into at least 100,000 taxpayers who failed to disclose off-shore bank accounts to HM Revenue & Customs under the off-shore disclosure amnesty.

60,000 made disclosures as part of the disclosure scheme. Insiders at HMRC said officials were sending out 3,500 enquiry letters a week to taxpayers who had not come forward during the amnesty period.

And they’ve said no one about whom they have suspicions will escape scrutiny.

Which is fantastic news. The profession did not believe they would have the nerve to do this. They were wrong, and I always thought that to be true. I’ve rarely seen HMRC bosses quite so determined. They hate offshore.

And if they got rid of the domicile rule their case would be made even easier. Because then everyone in the UK would be operating on a level playing field. That’s called tax justice.

Richard Murphy Amnesty