A question has been posted on this site. It asks:
I am puzzled by this so called offshore tax amnesty. I have for many years had an offshore savings account as a consequence of working overseas. But I have always declared interest for tax while resident and working in the UK. Yet the impression I am getting is that anyone holding an offshore account, interest declared or not, will be targeted or investigated if they do not "come forward". And as a matter of interest, just exactly what information has my bank been forced to disclose to HMRC?
Because the issue is perhaps of more general concern I've chosen to answer here, and not as a response that few will read.
- There is nothing illegal about a UK resident person holding an offshore account if, assuming they are domiciled in the UK and that seems likely from what you say, the interest is declared in the UK and all UK due tax is paid;
- Since it seems you have done this in theory you have no reason to make a declaration at this time;
- However, under the powers afforded to them under section 20 Taxes Management Act 1970 and under the EU Savings Tax Directive HMRC have now obtained information for the first time on accounts held in the Crown Dependencies by people who have addresses in the UK. I would stress that there is nothing sinister in this, and in my opinion the word 'force' should not come into debate. The same banks supply details of all interest paid by them in the UK to UK resident people to HMRC every year and have done so for as long as I can recall. All that has been created is a level playing field;
- The difference is, however, that most people with accounts in the UK are either a) basic rate tax payers for whom no additional tax is due on the account or b) tax compliant taxpayers where the additional liability they might owe at higher rate has been declared. It is an unfortunate fact that considerable numbers holding offshore accounts do not fall into this category. My evidence is that at least 70% of those with accounts in the Crown Dependencies asked for information on them not to be disclosed to HMRC under the EU Savings Directive. Candidly the only reason for that is a desire to evade tax unless (as is true for at most 70,000 declared people in the UK) they are not domiciled in the UK but are resident here and do not need to disclose.
- The result is that the Revenue are now aware of hundreds of thousands of accounts for the first time, many of which will give rise to tax liability in the UK. The Revenue don't have the resource to filter all this information so they're asking people to voluntarily declare their liabilities instead. I suspect that for at least 95% of those who do declare under the new disclsoure scheme any declaration now will be accepted by HMRC in full settlement of tax owing and that will be that.
- In your case you have no reason to make a declaration: you have paid your tax. So in theory you can ignore this.
- In practice I would not ignore this. But nor would I declare anything. I'd simply suggest that you write a letter to your tax office and say that you do have an account with XYX Bank in Jersey / Guernsey / Isle of Man with account number XXX and that you have always declared interest in full on the account on your tax return and that you have nothing more to pay now if you are entirely sure that is the case. That way you simply seek to prevent an enquiry arising later. It's not necessary, but I think it would help.
As I noted at the outset, it seems you've done nothing wrong. But the simple fact is that despite the claims made by Jersey, Guernsey and the Isle of Man that they don't want illegal funds associated with tax evasion in the Crown dependencies it seems likely that they've been awash in them, and this has resulted in the mildly unfortunate (but no more) consequences for the enquirer.