Page last updated at 14:22 GMT, Friday, 27 November 2009

Tax deadline extended for offshore savings

Money
HMRC wants to raise an extra 500m from its latest trawl

HM Revenue & Customs (HMRC) has given extra time for people to confess to dodging tax through offshore accounts.

The deadline of its current disclosure campaign has been extended from Monday 30 November to Monday 4 January 2010.

That is the date by which UK taxpayers who have failed to pay tax on their offshore savings or investments must indicate they will pay up.

The Revenue said the decision was taken to give banks extra time to contact their customers with offshore accounts.

"We know that some bank customers will not be contacted by their banks in good time for the original deadline of 30 November so in the interests of fairness we have decided to extend our deadline by a month to 4 January," said Dave Hartnett, HMRC's permanent secretary for tax.

"The new disclosure opportunity (NDO) is voluntary but from the start of the New Year we will begin to investigate those who were eligible to use the NDO but instead buried their heads in the sand."

Paying up

Payment of any unpaid tax must be made by next 31 January if disclosure is made on paper, or by 12 March if made electronically.

Earlier this month, 30,000 people who had come to the Revenue's attention were sent warning letters in an effort to get them to admit to any unpaid tax.

Dave Hartnett

"HMRC has not finished obtaining information from the 308 banks they have been granted permission for - meaning thousands more people will come to HMRC's attention," said tax consultant Adrian Huston.

Ronnie Ludwig, partner at the accountancy firm Saffery Champness, said the Revenue's latest move probably reflected a poor response rate to its campaign.

"People are simply not coming forward and will move their money around into risky banks in risky regimes in order to avoid the taxman," Mr Ludwig said.

"I also suspect that much of the cash will be held in nominee names by non-UK resident people or companies.

"We can expect stronger scare tactics over the next few months to try to coerce the account holders to come clean voluntarily," he added.

New target

The incentive for tax dodgers to come forward is that the penalties they face will be limited to just 10% of any unpaid tax, assuming they make a full confession.

But the miscreants will still have to pay the tax, plus interest, going back to April 1988.

The Revenue's first disclosure campaign in 2007 raised £400m from 45,000 people.

Those who refused to disclose apparently hidden money, and those who failed to pay up after initially saying they would do so, are still being investigated.

That campaign was targeted at the customers of the main five High Street banks.

The latest trawl is aimed at 308 smaller UK banks and foreign banks with branches in the UK.

The Revenue has a target of raising a further £500m.

Separately in August, the UK government signed a breakthrough deal with the tax haven of Liechtenstein.

This was aimed at forcing about 5,000 UK taxpayers with secret bank accounts there to pay some back taxes and penalties on the £2bn and £3bn they are thought to have stashed away.



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