The UK tax amnesty

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What is to be made of the UK Revenue's announcement that a tax amnesty is to be offered?

I blogged this issue yesterday, not knowing that the amnesty was to be announced during the day. And I have to say I'm pleased that the conditions I laid down look like they will be met, bar that the application of the amnesty is more widespread than I would have hoped. I do however have little doubt that it's human rights legislation that has required the amnesty to apply to all sources of income: on refection I realise it would have been prejudicial to apply it to one source alone. This therefore is a massive opportunity for the 'shadow' economy to come clean in the UK.

So what to add? I welcome the fact that the Revenue say that whilst they will accept disclosure in most cases as being complete, and that 10% penalties plus tax and interest will usually be the limit of liability. As a practitioner I know this to be useful. But I'm also delighted that they reserve the right to do otherwise, and name circumstances where this will not apply (page 10 here). It's absolutely right, for example, that those who have already settled cases in the past with the Revenue on the basis of full disclosure having been made should now be subject to very high penalty if it has transpired that this was not the case.

But perhaps the biggest things to note are these:

1) The Revenue look like they're managing this well: a clear web site and publications are available. The procedures are obvious. This is good news;

2) It looks like the publicity will be good: that's welcome, but I'd still strongly recommend every accountant to write to all their clients to mention this issue, now (I will be);

3) I sincerely hope accountants have the capacity to handle this work: the deadlines for notification are fairly tight (although I'm not complaining);

4) I hope the Revenue move after the amnesty to make clear that tax compliance has to be the basis for disclsoure in the future: the spirit as well as the letter of the law has to be followed. The amnesty is, in other words, over once this period comes to an end;

5) I hope practitioners get that message;

6) As I said yesterday, this is now the time to focus attention on the biggest culprits in this. Of course those who have these accounts and who knew they should declare the tax are at fault, but the big culprits are the banks who ran these accounts. They must have suspected many were used for tax evasion: I think they had to suspect that and should have reported it locally in the Channel Islands and the Isle of Man in every case where information exchange was not allowed under the EU Savings Directive, but none have done so as far as I can tell. Candidly, I think this a shocking neglect of duty on their part and questions have to be asked as to what they were doing in this case.

7) The same questions have to be asked of the credit card providers (usually banks) who in many cases facilitate remittance of these funds back to the UK.

As someone has said from the IoM on this site in the last 24 hours:

[A]s far as I am aware the vast majority of professionals both on- and offshore do do their jobs properly and take the greatest care to ensure that all relevant laws and regulations in their jurisdictions are complied with.

That is not good enough. You have also to be sure you're not facilitating crime elsewhere to ensure that you're not either assisting money laundering or tax evasion. What is clear is that this culture does not exist in the Isle of Man. This is precisely the problem the US Senate identified with the Isle of Man. Strict observance of local law allows a person to turn a blind eye to the reality of what is happening. I suggest that this is commonplace.

UK taxpayers need to get their act together now. Offshore, and its banks, need to do even more.