This is the view of tax adviser Alan McCann, who believes most of the 400,000 UK investors affected did not know about the offer until after the June 22 deadline, or went into financial denial because of the ruinous cost of owning up.
Only 50,000 people took advantage of the amnesty which wrecked the Treasury’s bid to scoop hundreds of millions of pounds in tax, and left offshore account holders potentially at risk of crippling penalties.
McCann, director of tax at UK Top 30 accountancy and advisory firm DTE, commented:
I have anecdotal, but compelling evidence that one individual realised there was a liability of 1.3m and simply could not come to terms with having to pay it.
Nonetheless, McCann is warning the thousands of people who have not come
forward that ultimately there is no escape. He said :
HMRC has the names and account numbers of all 400,000 investors potentially affected. They will sift their way through the entire pile, even if it takes years, and they will certainly go after the people they believe haven’t made a disclosure.
If you need to make such a disclosure, you should do so as soon as possible. The situation will not be as good as the amnesty, but it will be better than sticking your head in the sand and being held to account several months, or even years down the line.
From the public’s point of view, this is a costly fiasco. HMRC will have to divert enormous resources into resolving this huge issue. There could be thousands of tax investigations and hundreds of prosecutions – all paid for by the tax payer.
The amnesty from HM Revenue & Customs meant penalties would not exceed 10 per cent of any unpaid tax – much less than the level normally charged – for people who ‘came clean’ before June 22.
However, HMRC left the task of communicating its offer to banks, and
government officials were forced to send letters to 200,000 offshore investors only a week before the deadline, when it became clear that the initial response was so poor. McCann went on:
We sent more than 2,000 letters to other firms of accountants, warning that the clock was running down for clients exposed to this HMRC initiative, and received feedback from less than one per cent.
The clampdown follows a Special Commissioners’ ruling last year requiring Barclays Bank to provide HMRC with detailed information about offshore account holders. Barclays co-operated and four other large banks – HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB – have provided similar information.
Any disclosure must include details of the interest paid on funds held offshore, as well as consideration with regard to information on where the funds came from in the first place. Where an incomplete disclosure is made the taxpayer may be open to prosecution.
Disclosures must covers all types of UK taxes, potentially going back 20 years. Full interest will be charged on unpaid tax. Anyone with any concerns about the case should contact a professional adviser.