Second tax amnesty could hit offshore savers even harder

Tax haven: Jersey

Plans for a second offshore ‘tax amnesty’ by HM Revenue & Customs could see tougher penalties for people hiding their savings offshore, a tax expert has said, amid frustration over delays to starting the scheme.

Speculation has mounted since HMRC confirmed in October last year it would be conducting a second tax amnesty, which it calls an ‘offshore disclosure facility’.

The amnesty offers taxpayers a reduced penalty for voluntary disclosure of bank accounts held in offshore jurisdictions.

The penalty for HMRC’s first amnesty in 2007 was capped at 10% of the outstanding tax owed plus interest. The amnesty netted the taxman an estimated £400m.

Andrew Watt, managing director of tax disputes and investigations at Alvarez and Marsal Taxand, said taxpayers who disclose information relating to offshore bank accounts are likely to incur tougher fines in a second amnesty.

He said: ‘The penalty applied for the next amnesty might be higher as HMRC will argue they had an opportunity two years ago.’

In its first tax amnesty HMRC relied on the five major UK high street banks and accountants to inform customers and clients about the scheme.

But one tax expert familiar with the situation said the second tax amnesty was likely to be much bigger, extending to include customers of about 30 foreign banks.

Bill Dodwell, tax partner at Deloitte, said: ‘We’re puzzled as to why [the announcement of a second amnesty] has taken so long.’

Dodwell said the first amnesty was criticised for not being widely publicised.

‘If you didn’t understand a letter you got from the bank then you may not have made a disclosure and if you weren’t a client of an accounting firm then you may not have understood at all,’ he said.

A spokesman for HMRC said the department is yet to finalise details of a second amnesty. He confirmed, however, that discussions are continuing with the British Bankers’ Association, the Building Societies Association and the Association of Foreign Banks in determining ‘how we can work together on offshore accounts.’