The UK ‘tax amnesty’ – PWC’s view

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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.