The UK Extents Tax Amnesty

chaseFirst posted on Commercial Law International December 7, 2009. In a very surprising move HM Revenue & Customs (HMRC) has extended it tax amnesty program – the New Disclosure Opportunity (NDO). The NDO was set to expire on November 30 of this year but has been extended to January 4 of next. Under the program tax payers with undisclosed offshore accounts nestled away in any number of one or more tax havens are given a chance to come clean with UK taxman. The tax payer would pay a relatively small penalty – 10% as compared to a 100% penalty – on any back taxes owed but would also avoid the risk of prosecution. All in all the NDO doesn’t sound like a bad deal or is it? As good a deal as the NDO sounds, it seems that it hasn’t had as many takers as the HMRC would like. This lack of uptake helps to explain the unexpected extension. The NDO after all was designed as a very enticing carrot by HMRC in hopes of boosting its falling tax revenues by allowing tax evaders to avoid the very large stick of a 100% penalty and or prosecution. There are two possible explanations for this lack of uptake. The first and least likely is that there are very little, if any, taxpayers out there holding undisclosed offshore accounts. The second and more likely explanation is that taxpayers a hedging their bets, say to the taxman: catch me if you can. Taxpayers know, even amongst the accounts already disclosed, that it is a very time consuming and more importantly expensive venture to trace funds in offshore accounts.

2 Comments on "The UK Extents Tax Amnesty"

  1. I would also bet that many of the offshore account holders are also foreign passport holders and would have no problem leaving UK, with their money, on a moment’s notice. And then the game becomes “extradite me, if you can”.

  2. If you are a UK citizen or Resident, please feel free to sign the petition on the website below to bring fairness back to our tax system. This petition is for a GENERAL TAX AMNESTY for UK citizens. HELP MAKE YOUR VOICE HEARD and tell the government that YOU want fairness in our tax system.

    Either permanent or for a limited period, which allows taxpayers of their own accord, address the tax collecting agency and disclose inaccurate or incomplete information from past tax years, or disclose material they did not report during previous dealings with the agency, without financial penalty or prosecution. Grant Thornton published in September 2009 a Tax Manifesto, a proposal for reforming the tax system. In the core findings, the tax system needs to become more transparent but also measures are needed to bring people back into the tax fold and keep them there. The recommendation is that the UK implements a vigorous General Tax Amnesty to bring those in the hidden economy back into the tax system without fear of imprisonment or penalty. On the Treasury’s figures, the budget deficit will reach £178 billion in the current financial year. The benefits that accrue to the Exchequer from a comprehensive General Tax Amnesty are many and apart from the fiscal, the contribution to society in terms of compliance to the law is important and should be encouraged.

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