March 17, 2008 / 5:48 PM / 11 years ago

Taxman pursues offshore bank account holders

LONDON, March 17 (Reuters) - The taxman is chasing thousands of offshore bank account holders who have failed to come clean about their assets in an amnesty.

HM Revenue & Customs (HMRC) is writing to around 5,000 people whom it believes to be offshore account holders, but have yet to declare any savings and investment income.

They will have one last chance to come clean — or face stringent penalties.

It is one of a string of moves to clamp down on unpaid tax. HMRC is also pursuing those earning income from buy-to-let property investments, both in the UK and overseas.

Accountant PKF said the measures turn one of the central tenets of the English legal system on its head — by presuming that taxpayers are guilty and demanding proof of innocence.

Tax investigations partner John Cassidy said: “Legally, to issue an assessment for unpaid tax, HMRC must have made a ‘discovery’ or, in other words, have actual knowledge that further tax is due — not just that it might be due.

“Yet, the threat is that such assessments will definitely be issued unless informal, voluntary answers are given to the questions raised.”

Although taxpayers are under no legal obligation to respond, those who fail to, ultimately face an investigation into their tax affairs and hefty penalties.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said: “They (HMRC) are depending very largely on the willingness of offshore account holders to inform the taxman of their financial details, but if this is not done proactively, the taxman will find other ways and means — such as targeting banks and finance providers.

“This is an opportunity to put things right with the taxman, but they also warn that if a disclosure is made which shows interest and income has been received, then interest is payable and in some cases the taxman will seek ‘penalties’.”

HMRC will take co-operation into account when determining any penalties, but has said that these will now be no less than 30 percent of sums due.

“Tax evaders had their chance to come clean and pay reduced penalties of 10 percent last year,” said Gary Ashford, a tax investigations director at accountant and business adviser Grant Thornton.

“Now, HMRC is playing hardball and will be taking no prisoners.”

Editing by Stephen Addison and Paul Casciato

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