U.K. Treasury Confirms 10,000 Tax-Amnesty Disclosures - WSJ.com.
The Wall Street Journal reports:
Ten thousand people have disclosed previously undeclared offshore income and gains under the U.K. government's New Disclosure Opportunity tax amnesty, meaning revenue authorities can begin collecting unpaid tax, interest and penalties, the U.K. Treasury said Thursday.
"Now the NDO is closed, [HMRC] is beginning the job of using the data we have obtained from banks to identify people who have not made disclosures despite having hidden their money offshore," said Dave Hartnett, the permanent secretary for tax at the Revenue and Customs department. "We are starting our investigations, and penalties can be up to 100% of the tax not paid."
There's going to be a great deal to do. In the two amnesties in 2007 and 2009 (now closed) about 53,000 people have admitted offshore tax evasion.
What is very clear from data from the Crown Dependencies alone is that this is only a small proportion of the total number of accounts held there on which non-disclosure of income earned to HM Revenue & Customs has been requested.
I just hope adequate resources are now made available to tackle this issue with considerable vigour as is essential. That means, I suggest, a positive recruitment process of high grade staff, strong admin support to pursue considerable numbers of people and a 'shock' regime designed to create real fear amongst those who are acting (and let's be blunt about this) criminally at cost to the rest of us in society.
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This proves the point that the vast majority of accounts held offshore are not used for evading tax.
Game over, time to scale back recruitment surely!
Please do not be absurd
The revenue know of at least 100,000 undeclared revenue bearing accounts
Why deny it?
How do you work that out, Billy?
The HMRC press release is here: http://nds.coi.gov.uk/clientmicrosite/Content/Detail.aspx?ClientId=257&NewsAreaId=2&ReleaseID=410173&SubjectId=36.
We will be concerned about the new measures promised for 2010!
Girrl
Link does not seem to work Girrl
Treasury Minister calls for an end to offshore tax evasion 07 January 2010 11:53
Treasury Minister Stephen Timms called offshore tax evasion “morally unacceptable” today as HM Revenue and Customs’ announced that some 10,000 people had notified their intention to disclose previously undeclared offshore income and gains. Those who came forward under the new disclosure opportunity before the 4th January deadline now have to disclose and pay any unpaid tax, interest and a ten per cent penalty.
HMRC is now receiving data on offshore accounts requested from over 300 banks. It is using this to identify those who should have come forward but have chosen not to. Enquiries will be started into those cases.
The Right Honourable Stephen Timms, Financial Secretary to the Treasury, said today:
“Hiding money in offshore accounts to evade tax is economically and morally unacceptable. It robs public services of funding and places an unfair burden on the honest majority of taxpayers.
“Some people will still be tempted, and that is why the Government will bring forward measures during 2010 to build on the significant progress made both in the UK and globally during 2009 in closing down offshore tax evasion for good.”
Dave Hartnett, HMRC’s Permanent Secretary for Tax, said:
“Now the NDO is closed, HMRC is beginning the job of using the data we have obtained from banks to identify people who have not made disclosures despite having hidden their money offshore. We are starting our investigations and penalties can be up to 100 per cent of the tax not paid. But it’s very important to remember that, when someone comes forward voluntarily, the penalty is always lower than when we catch the evader. This means it’s still well worth contacting HMRC if you have undisclosed offshore accounts.
We are also examining information about offshore accounts in order to help us identify intermediaries who have assisted UK residents in hiding money offshore.”
So you should be worried
So should many advisers be worried as well
And I am delighted by these moves
Richard, I have a question if I may.
It seems like all institutions contacted by the HMRC have stated that they have no access to any information about accounts maintained by their Swiss private banking affiliates. Those are incorporated as Swiss banks and are therefore subject to Swiss banking secrecy laws which prohibit the sharing of any information with third parties, including non-Swiss (i.e. UK) affiliates.
The only way for the HMRC to gain access to information about these accounts is to (i) identify them by their own means and (ii) demonstrate prima facie evidence of wrongdoing. In fact, this is no different that the position under the recently anmended DTA.
So, unless a UK resident with a Swiss bank acount has been exraordinarily carelss in prtecting his/her identity, there is not much the HMRC can do other than folow the standard DTA procedure.
What is the HMRC’s way of dealing with this problem?
Withdraw their London banking licences is my suggested response
I hope they do
Richard,
The HMRC would not have the authority to do this. I assume this would need new legislation at the minimum.
In addition, since many of these banks operate under the EU branch or passport regime, this would have to be legislated at the EU level.
all this indicates to me that the HMRC’s current strategy is a loser.
Is there anything else to be done?
Ted
Your suggestions?
Richard
Richard,
I don’t have a solution. This type of your issues are not my line of business, but yours.
I think however that the HMRC should have done its homework before going live with this disclosure opoortunity. Then again, it is an election year and it looks like HMRC and the Treasury do not care much about homework.
The HMRC will score some marginal hits in the European CD’s, although those had already been largely harvested when the HMRC gained access to the client account information of the big UK money centers. On Switzerland however, the HMRC’s strategy will be exposed as completely flawed and this will undermine the credibility of the entire effort.
Since any attempt to deal with this at th EU level presents its challenges (Austria and Luxembourg will veto anything that Switzerland does not agree too as well), there are no easy solutions.
Maybe it would be more productive for the HMRC to concentrate not so much on capturing tax on these accounts’ current income, but on implemeting poilicies that restrict the availbility and access to the funds.
An increasingly frequent “complaint” about offshore banking is that, while it is relatively easy to maintain an account with adequate privacy, and to accumulate income on it, it is becoming very difficult to wire funds in and out of these accounts without attracting the scrutiny of unwanted parties, including foreign tax authorities. Obviously something is working there.
These policies would force the HMRC to implicitly admit that it is relatively powerless about the existing acounts and the income they generate, but (if well designed and implemented, which based on recent experience is giving a lot of credit to the HMRC) they would create a powerful dis-incentive to add to offshore holdings.
Ted B
The answer for the UK and EU is actually very easy. End the right to withhold tax on offshore income and adopt automatic exchange of information. If any bank then fails to comply with its information reporting obligations then withdrawing its banking licence both in the UK and in the offshore jurisdiction becomes so much more straightforward as it will have committed a criminal offence. Very hard to do this in Switzerland though under current legislation as Switzerland will never sign up to automatic exchange and so no criminal offence will have been committed there. But any refusal by Switzerland to sign up could result in it being a criminal offence for any UK or EU bank to operate a Swiss branch or subsidiary, resulting in that bank losing its banking licence in the UK or EU. Its the only way to get a level playing field in Europe, but won’t actually catch the money or collect any more tax as all the undeclared money in question will simply disappear to non-EU jurisdictions which have no interest whatsoever in signing up to the EUSTD. Its the classic “leaky bucket” with no way of plugging the holes other than with temporary sticking plaster. Capital is free to move all over the world and its very hard to see how that will change.
@Rupert
Rupert
Crikey
You’re getting this, at last
What you don’t get though is that regulation is now worldwide
The FATF has ensured that is the case
So revenue will be raised
The havens will fall like dominoes
Richard
Richard
I have always “got it” as far as tax evasion is concerned. You won’t find any postings from me which suggest otherwise. But I don’t see Hong Kong, Singapore or Dubai amongst others being remotely interested in coming to the party, nor do I see anyone putting pressure on China to bring Hong Kong into line or on anybody pressuring the Arabs while they have the much-needed oil, which in the UAE’s case buys around 200 years of time.
Rupert,
I believe I can follow your line of argument, but I am not sure whether it can be implemented or what it would achieve.
I understand that you suggest for the EU to unilaterally amend the terms of the current EUSD and require automatic exchange of information from its participants, including Switzerland (as opposed to the current regime of withholding at escalating rates). In order to this, the EU would require a unanimous mandate from member states. This is unlikely to happen because Austria, and especially Luxembourg will never agree to it. Both have found it convenient to use Switzerland as an excuse to bat the issue of automatic exchange way out of the field, but would veto any attempt to impose it.
Even assuming that two soveregn EU nations can be convinced to vote against their vital interests, thereby forcing Switzerland to withdraw from the EUSD, I am unsure what would be achieved.
In fact I am not sure this would inflit any particularly relevant harm on Switzerland.
The large multinational Swiss banks would presumable split their wealth management businesss from their intenational banking operations (and some shareholders in UBS would be over the moon about this)
Account holders with Swiss subsidiaries of international banks would simply transfer their accounts to private Swiss banks (and I can already see some bankers in Geneva or Zurich salivating at the prospect)
As you pointed out yourself, the policy you suggest would not raise much, if any, revenues for EU governments. In fact, these governments would probably see their own banks and thier shareholders as the biggest losers in this. This is surely not the intended purpose.
Richard,
Speaking of secrecy jurisdictions, I hope I’m the first to point this out to you:
http://www.gov.je/TreasuryResources/IncomeTax/Bulletin+Board/FoundationsJerseyLaw200.htm?printfriendly=true
Jersey’s own Comptroller seems to accept that the only reason anyone would wish to establish a foundation is for tax avoidance! Classic “one rule for our citizens, a different rule for foreigners” tax haven legislation.
Pete
Ted B
So you are saying that none of Austria, Luxembourg or Switzerland will comply ? The EU cannot expect Switzerland to comply if it cannot even get its actual members to comply. Surely the EU has the power, directly or indirectly, to force Austria and Luxembourg to join Belgium in agreeing to automatic exchange ? The EUSTD is doomed if their stance does not change.
So you are saying that none of Austria, Luxembourg or Switzerland will comply ? The EU cannot expect Switzerland to comply if it cannot even get its actual members to comply. Surely the EU has the power, directly or indirectly, to force Austria and Luxembourg to join Belgium in agreeing to automatic exchange ? The EUSTD is doomed if their stance does not change.