Amnesty for offshore tax evaders
By Helen Power
Sunday Telegraph (UK) Last Updated: 12:10am GMT 24/12/2006
The Government is set to announce within weeks an amnesty scheme for tax evaders who have stashed money in offshore bank accounts. Her Majesty's Revenue & Customs (HMRC) has contacted a number of banks and accountancy firms to outline the new scheme and, in a parallel move, has stepped up its efforts to compel high street banks to hand over customers' offshore account details.
The formal amnesty scheme requires government clearance, but could be finalised as early as mid-January when HMRC is also set to announce its massive clampdown on offshore accounts.
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A Government source said: "There is a discussion going on with the banks and the accountants as to what sort of process we might use to encourage people to come forward."
"We are working in the background on ways of encouraging them to do just that," she added.
While it is perfectly legal to hold money in offshore bank accounts it is illegal to conceal interest earned on it. HMRC estimates that failure to declare interest on offshore accounts has cost it billions.
The snowballing campaign, which is being run by the Offshore Fraud Project Group, had a massive boost back in May when HMRC won a landmark legal victory against Barclays Bank. advertisement
The Special Commissioner's ruling gave the Revenue power to force Barclays to hand over details of thousands of customers' offshore bank account details.
HMRC estimated at the time that access to the records would allow it recover around £1.5bn in unpaid tax from Barclays customers.
It is thought the Revenue is close to winning further legal cases which will force other high street banks to hand over customer information in a controversial move that will outrage many in the financial community.
To sweeten the pill the Revenue looks set to offer a partial amnesty for minor offenders that will cap fines and back taxes at between 10 per cent and 25 per cent of their maximum level. Fines for non-payment of taxes can currently be set at 100 per cent of the unpaid amount and tax evaders will also be liable for the back tax, plus interest.
HMRC is thought to believe more than £180bn is held in offshore accounts by UK nationals, with the Channel islands -- particularly Jersey -- a favourite desination for British cash. The Revenue has been battling with the high street banks for nearly 20 years to get access to information on offshore accounts. Its first big victory was against Ulster bank in 2000.
HMRC has had few high-profile victories on personal tax avoidance in recent years. Its most notable success was probably against former jockey Lester Piggot who was sent to prison for tax evasion. The former champion jockey was jailed by an Ipswich court for three years in 1998 after pleading guilty to a tax fraud that cost the Revenue £3.25. [sic]