The UK tax amnesty 2007

Posted on

KPMG has published a review of the UK tax amnesty (officially the “offshore disclosure facility”) run by HM Revenue & Customs in 2007. They summarise the outcome as follows:

62,000 people came forward during the initial registration stage and around 45,000 of these decided to disclose and pay the tax, interest and a fixed 10% penalty by the 26 November 2007 deadline.

HMRC is pursuing those with offshore accounts who did not come forward under the arrangements where there is a risk that the full amount has not been declared. In the most serious cases, criminal investigation may follow.

The ODF has so far recovered around £400m in unpaid revenue. The cost to the Exchequer of running the ODF has been approximately £6.5m.

I admit I have ethical concerns about such amnesties: I am worried that they create an expectation of future leniency, there is no doubt that another amnesty is on the way. The last one was only targeted at the customers of Barclays, HBOS, HSBC, Lloyds and RBS (all of whom fought it).

This does make some case studies that KPMG published quite interesting, not least because so many from Jersey, Guernsey and the Isle of Man (who were by far the most important territories targeted) say that I am wrong to suggest that there is any tax evasion taking place in these islands now. Take this case study as an example:

Large offshore structure

• UK resident and domiciled individual
• Settlor of offshore trusts, some with underlying overseas and UK companies
• Offshore accounts in own name
• Some offshore companies managed and controlled in the UK
• Range of technical arguments successfully advanced to minimise tax exposures

Disclosure covered 18 years ended 5/4/06
Total settlement £1.5m
KPMG fees (excl VAT) approx £50,000.

Note the period covered. We are talking about 2006. So let's have no pretence that tax evasion was eliminated from these islands a decade ago, as they like to claim. It is current. It is rampant. The numbers quoted by KPMG prove it.

And let me be blunt: there is absolutely no chance at all that those involved in managing the trusts referred to in this case study did not know that tax evasion was involved. There is no chance at all that the banks did not know that their client was involved in tax evasion. There is no chance at all that the nominee directors of the offshore companies that were trading in the UK did not know that they had a UK tax liability. In other words, they all knew that they were assisting tax evasion.

My accusation is simple: there are lawyers, accountants, and bankers in Jersey, Guernsey and the Isle of Man knowingly facilitated tax evasion but who turn a blind eye to it despite the legal obligation imposed upon them by their own governments to declare suspected tax evasion to their money laundering authorities whether that tax evasion takes place within their own island or elsewhere.

I am not saying that every lawyer and accountant or bank is involved in this process. There must be some who are not. I expect that each of the banks I name above is involved in this process: it would be impossible otherwise for at least 42,000 of their customers to have made a declaration of tax evasion. They cannot pretend they did not know that was going on.

It is my suggestion that this is still going on. The cost of the UK is at least £4 billion a year. Jersey alone costs the UK more than a billion a year in tax evasion that if deliberately facilitates (and I stress: I am saying by creating secrecy that permits evasion to happen it deliberately facilitates the process which I must see as a foreseeable consequence of its actions).

This is why these places have to cooperate now or face sanctions. The time for prevarication is over.


Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:

You can subscribe to this blog's daily email here.

And if you would like to support this blog you can, here: