2nd Offshore Tax Amnesty Announced
Newsletter Issue - September 2009
If you live in the UK you should declare on your UK tax return all of the interest you receive from investments and deposit accounts situated anywhere in the world. This applies even if you don't transfer that income into the UK. Individuals who have non-domicile status (normally not born in the UK), can apply to use what is called the 'remittance basis', and in those few cases the off-shore interest does not have to be included on their UK tax returns if it remains outside of the UK.
The Taxman has a campaign to track down everyone who has held an offshore bank account or investment, and who has not reported the income as they were required to do so. A larger number of foreign banks, including the most secretive banks in Liechtenstein, have been forced to provide lists of account holders to the UK Tax Office. The accounts on this list include trustee accounts, bond accounts and all types of current and investment accounts.
Banks are required to provide the dates for which the account was open, the name and date of birth of the account holder, the balance at 31 March each year, and detailed transactional information for certain periods.
If you had an offshore bank account at some point in the past, which you forgot to include on your tax return, now is the best time to correct this, voluntary disclosure will result in a penalty of 10% of the tax compared to up to 100% if the HMRC unearth the amount through its own enquiries.
HMRC will also be looking for tax on the underlying capital where that came from an undeclared taxable source.
We can help you with this, but you must notify HMRC by 30 November 2009 of your intention to make a disclosure, and the full declaration must be submitted by 12 March 2010.
If you use this time to come clean to the Taxman, you still have to pay all of the tax and interest due, but the penalty for failure to disclose in earlier years will be limited to 10%. However where the bank was a branch of one of the main UK banks the penalty may be 20%, as you could have disclosed this interest two years ago, under a similar scheme that ran in 2007. In normal circumstances the penalty can be up to 100%!