ATT is calling for taxpayers to be given a ‘last chance’ to declare offshore income and gains before the introduction of a tough new penalty regime, saying such a move would increase revenue to the Exchequer at little cost to HMRC
A final chance to come clean is one of the suggestions in the association’s response to the government consultation Tackling offshore tax evasion: Strengthening civil deterrents. Proposals under discussion include higher penalties for non-disclosures relating to Inheritance Tax and new sanctions to deter people from moving assets in order to keep them hidden.
Natalie Miller, ATT president, said: ‘There have been various facilities designed to encourage voluntary disclosure of offshore income and gains. However, these are not well-known or understood by the general public. The prospect of a significantly tougher penalty regime provides a strong incentive to taxpayers to clean up their act and make a last chance voluntary disclosure.’
In its submission, ATT recommends that any such additional disclosure facility should include a well-resourced helpline and clear guidance on how and who to contact. There should also be an opportunity for taxpayers (or their agents) to correspond with HMRC in advance of any detailed disclosure.
Miller also cautioned that applying penalties for non-disclosure of the assets of a dead person for Inheritance Tax purposes would need to be done with care, saying: ‘The personal representatives of the deceased can only be expected to make reasonable enquiries. They cannot be expected to pursue speculative enquiries about the possible existence of offshore assets of which they have no reason to have any knowledge.’
ATT’s comments follow on concerns voiced earlier this week by the Low Incomes Tax Reform Group (LITRG) that the new proposals risk catching low-income migrants to the UK who have made a genuine mistake about the UK tax status of a source of income in their home country.
Anthony Thomas, LITRG chairman, said: ‘Migrants who come to the UK to work will often have a small amount of income arising in their home countries too. They may now face a criminal conviction for having that income because the prosecution does not have to prove that they intended to avoid UK tax.’
LITRG wants the legislation to be amended to reflect the difference between active evasion and non-declaration through the lack of requisite knowledge, and says there should be a minimum of £5,000 unpaid tax for there to be any question of criminal liability. It also wants to see a ‘reasonable belief’ defence written into statute.
