 Disclose your offshore accounts to avoid 200% penalties
09 December 2009: An announcement in today’s Pre-Budget Report highlights that anyone with tax irregularities related to offshore bank accounts, should come forward immediately, say accountants and business advisers PKF.
The announcement covered new and tough measures to punish those with undeclared offshore tax liabilities. Failure to declare such liabilities will attract tough penalties usually associated with tax evasion. There will also be a new requirement to notify HM Revenue & Customs (HMRC) when opening offshore bank accounts in certain jurisdictions, supported by an additional penalty regime. Evading tax offshore could therefore result in combined penalties of up to 200 per cent of the unpaid tax. In contrast, the ongoing New Disclosure Opportunity (NDO) and its Liechtenstein equivalent, the Liechtenstein Disclosure Facility (LDF), offer penalties as low as 10%.
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 | John Cassidy, tax investigations partner at PKF, said: “There is currently a golden opportunity to make use of the NDO or the LDF. Tax problems can be properly squared away with HMRC with only low penalties being applied and the minimum of fuss. The penalties under the new proposals are huge and, once the tax has been paid, could easily wipe out the entire account and more on top.”
Cassidy continues: “This affects anyone who could have used the NDO or LDF but didn’t – effectively anyone with an offshore bank account linked to an underpayment of UK tax. It is financial madness not to address these problems immediately by taking advantage of the disclosure facilities currently on offer.” |
The announcement of a penalty for failure to disclose new offshore accounts seems to be the first step on the path used in the USA. Under the “FBAR” rules in the USA, taxpayers now have to declare details of their offshore accounts when filing future tax returns, otherwise they face crippling penalties.
John Cassidy comments: “HMRC has clearly learned from the experiences of the IRS. If this trend carries on, its next move will be an announcement that all offshore accounts have to be listed each year, backed by swingeing penalties for those who don’t report their accounts.
“Things are only going to get tougher for offshore account holders. Common sense dictates that anyone who has not declared their offshore account should now use the NDO or LDF to get their tax affairs put right while it is still relatively cheap to do so.”
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For further information, please contact:
Jane Murray, PR, 020 7065 0135, jane.murray@uk.pkf.com
Notes to Editors:
- PKF is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk.
- PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Guernsey) Limited is incorporated in Guernsey.
- PKF (UK) LLP is a member firm of the PKF International Limited network of legally independent firms. The PKF International Limited network has more than 14,650 people operating in 119 countries around the world.
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