TaxAdministrationAdvisers hold the key to success of offshore amnesty

Advisers hold the key to success of offshore amnesty

The success of the taxman's second amnesty could depend on the guidance depositors receive from their advisers

tax haven

Tax haven: Jersey

Tens of thousands of offshore account holders in up to 500 banks may be
targeted by the taxman in the second stage of its campaign to tax funds being
held overseas, but the success of the whole project could depend on the guidance
depositors receive from their advisers.

Accountancy Age learned last week that HM Revenue & Customs
would be writing to the banks asking for account details by the end of March,
and that the number of institutions to be targeted would run into the hundreds.

The taxman is then expected to offer some form of amnesty, referred to as an
offshore disclosure facility, in return for voluntarily disclosing how much
money they have offshore. The first offer last year netted around £450m in extra
tax revenues.

But according to Louise Somerset, tax director at RBC Wealth Management,
making the project work could rely on how tax advisers relay the terms of the
amnesty to their clients.

She says all long-standing clients of RBC Wealth Management disclosed the
information sought by HMRC during the first amnesty in 2007, and the focus will
now switch to newly-acquired clients.

‘We’ll be talking to our new clients about the risk and checking whether
there’s anything to disclose. When the terms of the second amnesty are
announced, we’ll be asking new clients if they have anything that needs to be
disclosed and our advice to them is certainly to disclose any information on
accounts held offshore,’ she says.

Several changes in tax rules have been introduced since the 2007 amnesty,
including the adoption of new tax information exchange agreements which could
affect the need for some clients to voluntarily submit the information to HMRC.

RBC is not expecting an influx of clients enquiries from the second amnesty,
with Somerset conceding the business would be in an ‘extremely difficult
position’ if clients were unwilling to disclose details.

Somerset says the success of a second amnesty is underpinned by HMRC
adequately publicising the scheme, and ensuring all taxpayers ­ not just those
represented by an accountancy firm ­ are aware of their obligation to disclose.

‘Part of the problem last time around was there wasn’t much information made
available and it’s concerning that the same thing could happen again. All HMRC
have done is publish a small paragraph in the pre-Budget report. If they require
people to take advantage then they have to make it more public,’ she says.

The first amnesty targeted an estimated 100,000 taxpayers with accounts held
by these banks, of which 60, 000 voluntarily disclosed information under the
terms of the scheme.

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